Pemex targets triple-tranche bond as markets digest FOMC minutes
Pemex is poised to grab an issuing opportunity as markets respond to Wednesday’s US FOMC meeting minutes, becoming the first Latin borrower to sell a dollar bond since May.
Pemex is poised to grab an issuing opportunity as markets
respond to Wednesday's US FOMC meeting minutes, becoming the
first Latin borrower to sell a dollar bond since May.
Pemex opened books Thursday morning for a three-tranche bond
issue, comprising five-year fixed and floating rate bonds and a
long 10-year note.
The deal is set to be the first plain-vanilla dollar bond by
a Latin American borrower since Santander Chile sold a $250m bond on May
31. The Mexican oil company was last in the dollar
market in January, selling a $2.1bn 10-year fixed-rate note
to yield 170 basis points over US Treasuries.
The new transaction came as US Treasury rates rallied and
investors sold dollars following comments from the US Federal
Reserve. The 10-year UST was changing hands at 2.57% yield on
Thursday morning, in from 2.7% at Wednesday's close.
Minutes from the Federal Open Markets Committee's June
meeting released Wednesday indicated less consensus than
expected over how the US will taper its unprecedented $85
billion a month quantitative easing (QE) program.
Barclays described Wednesday's minutes as confusing, saying
they indicated members were concerned about disinflationary
trends and wanted to see more improvement in the labor market
before beginning to roll off QE.
"Although these positions may sound obvious, they were not
clear at the June meeting and are somewhat inconsistent with
the degree of certainty communicated about the likelihood of
tapering purchases in the next several meetings (or months) as
suggested by the chairman and many other FOMC participants in
speeches leading up to the meeting."
But the bank says it still expects the Fed to begin cutting
the size of its QE program in September, to $70bn per
Analysts at Société Générale
took a similar view, saying the "remarkably strong" moves in
global emerging markets overnight came as markets interpreted
Bernanke's comments as a sign that the Fed would delay the
wind-down of QE. "Yet we are not convinced. While the strength
of the move suggests that this rally may continue in the near
term, we do not believe that this is the right way to position
Despite a near term pause in the rise of yields on USTs,
SocGen believes the 10-year could rise as high as 3.5% over the
next six to 12 months. LF