(Updates with closing price in second paragraph)
Oct. 12 (Bloomberg) -- Cemex SAB, the largest cement maker in the Americas, jumped as much as 27 percent amid speculation investors sold short positions on the U.S. shares.
Cemex’s American depositary receipts rose 19 percent to $3.44 at the close in New York. The ADRs, which equal 10 locally trades shares, rose to as high as $3.69, marking the biggest intraday increase since December 2008.
There is short interest on 84.3 million ADRs, the highest level since 88.3 million in March 2009, according to Bloomberg data. Investors sought to get out of their short positions, which added to a rally that began amid a global market rebound this week, said Benjamin Theurer, a Barclays Bank Plc analyst in Mexico City.
“It’s the classic move on short interest. You could make a lot of money today,” Theurer said. “There’s no fundamental explanation today for a move of 20 percent.”
Stocks in the U.S. and Mexico rose after European leaders outlined plans to recapitalize banks and head off a sovereign debt crisis. Cemex said it has nothing to disclose concerning the shares’ upsurge in a filing to the Mexican stock exchange.
Cemex’s U.S. shares before today’s trading had plunged 72 percent this year on concern over sluggish construction in the U.S. and a decline in the Mexican peso, which hurts the company’s profits in dollars. Cemex is struggling to meet debt covenants and may have to renegotiate them with banks, Theurer said. At the end of June, Cemex had $18.4 billion of total debt plus perpetual notes.
“I still have my doubts concerning the covenants,” Theurer said.
Cemex Chief Executive Officer Lorenzo Zambrano said the company would meet a year-end covenant by selling assets, cutting costs and improving profits. Cemex’s profits plunged in 2009, forcing it to negotiate a $15 billion bank loan to avoid default. The company’s debt soared after it purchased Rinker Group for $14.2 billion in 2007.
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