state-owned oil monopoly, faces an unusual problem for a major
oil company. Although it is one of the world's largest oil
producers, it is financially overstretched because it transfers
nearly all its profits to the government. This leaves little
money for exploration and big-ticket investments. Pemex has,
out of necessity, become one of Latin America's most
sophisticated frequent issuers on the international capital
markets. Last year, the company raised $6.53 billion through 12
international bond sales, second only to the government, which
issued $7.38 billion.
In December, Pemex came to the market with a highly unusual
transaction. It hired UBS, JP Morgan and Merrill Lynch to sell
a bond exchangeable into equity in another company. The deal
raised $1.37 billion in Europe and the US for Pemex with a bond
that can be converted into its 4.9% stake in Spain's Repsol
YPF. This was the...
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