Banks show confidence in Pemex, AMLO says
July 1, 2019 |
More than 20 lenders join an $8bn syndicated loan for Mexico's state-owned oil company
Foreign and domestic banks have shown confidence in Mexico's Pemex by signing on to an $8bn syndicated loan for the state-owned oil company, President Andrés Manuel López Obrador said at a press conference.
"Banks don't act without information. They don't make a decision because they like the government, any government. They know that Pemex is doing well," AMLO said.
Pemex signed the five-year loan with 23 banks on Thursday, including 14 of the 20 largest banks in the world, AMLO said in a tweet. The company came to terms on the syndicated loan with HSBC, JPMorgan and Mizuho in May.
Pemex will use the new loan, which includes two revolving credit lines for $5.5bn and a term loan for $2.5bn, 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 years. "That means we will have $8bn in funding for the entire six-year term [in office]," AMLO said at the press conference.
The other banks in the loan include Bank of America, Bank of China, Banorte, Barclays, BBVA, BNP Paribas, Citi, Crédit Agricole, DZ Bank, Goldman Sachs, ICBC, ING, Morgan Stanley, MUFG, Natixis, Santander, Scotiabank, SMBC and Société Générale.
The new revolvers carry similar terms to the three-year, $1.5bn facility that Pemex signed with 21 banks in November 2016. The old revolver, led by Bank of America, Citi, Crédit Agricole, HSBC, Mizuho and SMBC, priced at at 185bp over Libor, compared to a three-year credit line at 80bp from December 2013.
Fitch Ratings dropped Pemex's bonds to junk status with a negative outlook after it downgraded Mexico's sovereign ratings to BBB in June. Moody's affirmed Pemex's ratings at Baa3, the lowest notch in investment grade, but changed the outlook to negative. AMLO, however, said all the banks at the meeting said they had confidence in Mexico's economy.
Pemex has said it will not take on new debt until 2022, when it could refinance bonds in the cross-border market. The government has said it could lower Pemex's taxes and set aside $7.5bn from a budget surplus fund to shore up the company's finances.