Pemex rolls out green bond plans
May 23, 2014
Debt to finance environmentally and socially responsible investments is taking shape from the Mexican oil company
Pemex is hoping to issue a “green bond” to diversify its investor base in the coming months, the company’s treasurer told LatinFinance.
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The transaction, which is in the early stages of being structured, would finance environmentally sustainable and socially responsible projects, said Rodolfo Campos Villegas. Already, the company has found interest in Europe.
“There are investors, including some of the big fund managers, that still don’t have a close relationship with Pemex, in particular in Europe and Scandinavia, where these type of assets are more developed,” Campos told LatinFinance. “So in the next few months we’ll be doing an effort to get closer to that community of investors and hear their impressions.”
Sales of green bonds globally could double to $20bn this year, as borrowers target a broader range of investors and as demand grows for sustainable investments, Standard & Poor’s said this week. The agency defines green bonds as having proceeds ring-fenced for projects that address environmental issues.
“Crucially for investors, the credit risk of a corporate green bond remains on the issuer's balance sheet,” the ratings agency said in a May 20 statement. “This means that, unlike with multilateral bank issuance, investors do not have to sacrifice yield to gain green exposure, nor significantly increase their risk profile in order to invest in assets that aid environmental efforts.”
Pemex is still analyzing the portfolio of projects that would be included in the deal, Campos said. The bond could be sold in euros.
“We’re still thinking about the currency, but it looks like there is more acceptance in the Euro market, it looks like the investment base there is more developed, but that’s something we still need to analyze in detail,” he said.
Pemex has already sold large bonds this year in dollars, euros and Mexican pesos.
“With this green bond we would be accessing a different type of resource from those we tap with a regular issuance, so that’s our first objective,” Campos said. “Our second objective would be to promote a portfolio of projects related to social responsibility and sustainability.” LF
Find further details of Pemex’s green bond plans in LatinFinance’s Daily Brief.
See also: A new beginning Mexico’s energy reform opens the way for Pemex to modernize its capital structure and improve its financial position, writes its chief executive Emilio Lozoya