Mexico’s state-owned oil company PEMEX announced on Wednesday the issuance of bonds totaling US$5.5 billion, a development the company said signals investor confidence in the NOC and in Mexico.
The issuance consisted of one 10-year with a 6.625 percent fixed rate yield for US$3 billion, a 5-year 5.5 percent fixed rate worth US$1.5 billion and an additional 5-year floating rate of 3 month LIBOR plus 365 basis points, worth US$1 billion.
Record interest from investors
The bond attracted approximately US$32 billion worth of orders from investors, almost six times oversubscribed. It is the largest single-transaction amount by any Mexican issuer and the second largest in Latin America, PEMEX said. A total of 687 investors participated. The record number of investors to participate in a PEMEX bond issue included pension funds, portfolio managers and financial institutions. Active bookrunners included Bank of America Merrill Lynch, Citigroup and JP Morgan, among others.
The interest in the issuance demonstrated investor optimism in Mexico’s NOC, and specifically in the current administration’s financial strategy, PEMEX’s business plan and the Energy Reform, the company said in a press release.
Trion & deepwater success
The news comes on the back of Monday’s farm-out results, when CNH announced that PEMEX will partner with BHP Billiton to operate the deep water Trion block. The results of deepwater round 1.4 were also decided, with eight out ten blocks successfully awarded to companies including China Offshore Oil Corporation, Total and Chevron.
“Oil was trending in the right direction and the announcement yesterday obviously helps,” one banker said to Reuters’ IFR.
The financial resources garnered from the issuance will be used for PEMEX’s strategic investments, the press release stated, with the goal of promoting the proper functioning of the company and a prudent management of its finances.