Quasi-Sovereign Bond of the Year and Syndicated Loan of the Year: Pemex

Quasi-Sovereign Bond of the Year and Syndicated Loan of the Year: Pemex

Hoping to get its financial house in order and restore investor confidence, Mexico’s state-owned oil giant Pemex executed two eye-catching deals over the past year that included a three-tranche bond sale and the largest syndicated loan in the region.

In a September deal just hours after Mexico’s government announced a $5 billion capital injection for the company, Pemex made its first foray into the international capital markets in 2019 with a $7.5 billion triple-tranche deal. More than $37 billion in orders poured in from investors, despite the company’s junk rating from Fitch Ratings.

It sold $1.25 billion in seven-year bonds at a yield of 6.5%, $3.25 billion in 10-year paper at 6.85% and $3 billion in 30-year bonds at 7.7%. Bookrunners set the initial price talk at 6.7% for the seven-year notes, 7.25% for the 10-year notes and 8% for the 30-year notes. But as orders climbed, the pricing was cut.

Citi, Goldman Sachs, HSBC and JPMorgan were joint bookrunners on the deal, while Bank of America, Crédit Agricole and Mizuho were passive joint bookrunners.

Pemex used the new notes to refinance existing debt. Using the federal government’s capital injection, the company had also launched a tender offer to buy back $5 billion in bonds with due dates between 2020 and 2023.

The financial operations, combined with an additional swap of longer-term bonds, resulted in a debt reduction of $5 billion and refinancing of some $20 billion in liabilities, according to Mexico’s Financing Ministry. The deals were part of what Pemex described as the company’s largest refinancing operation in history.

The bond sale followed a record $8 billion syndicated loan that Pemex secured with more than 20 banks in June. Pemex has said it would use the loan, which includes two revolving credit lines for $5.5 billion and a term loan for $2.5 billion, to pay off outstanding debt.

During negotiations, the spread came down to 235bp over Libor, equal to a rate of 4.85% per year and the tenor grew to five years from three.

Award accepted by: Gabriel Yorio, Deputy Secretary of Finance, and Galia Borja, Treasurer

Quasi-Sovereign Bond of the Year

Date: September 2019

Size: US$ 7.5 billion

Supporting Financial Institutions: Citi; Goldman Sachs; HSBC; J.P. Morgan; Bank of America; Credit Agricole; Mizuho

Supporting Law Firms: Shearman & Sterling; Cleary Gottlieb; Ritch Mueller

Award accepted by: Brenda Ciuk, Ministry of Finance

Syndicated Loan of the Year

Date: June 2019

Size: US$ 8 billion

Supporting Financial Institutions: HSBC; J.P. Morgan; Mizuho; BBVA; BNP Paribas; MUFG; SMBC; Credit Agricole; Bank of AmericaNatixis; Santander; Barclays; Scotiabank; Société Générale; Citibank México; ICBC Dubai; Bank of China; Goldman Sachs; Banorte; ING; Morgan Stanley; BCI Miami; DZ Bank 

Supporting Law Firms: Shearman & Sterling; Ritch Mueller; Cleary Gottlieb

All supporting financial institutions and law firms were transmitted to LatinFinance by the award category winners. For updates please email awards@latinfinance.com