Mexican Oil Giant Benefits From Blue-Chip Interest

Petroleos Mexicanos (Pemex), joining a growing number of Latin American blue-chip issuers benefiting from longer tenors and more aggressive pricing, has inked a new $1.25 billion revolver. The new line brings together three expiring facilities and gives the company additional liquidity, said Mauricio Alazraki, associate managing director of finance at the Mexican state oil company. He noted that pricing has improved in comparison to the previous three or four years with market liquidity and Pemex's investment-grade rating as factors. The facility is split into a three-and-a-half-year, $600 million trade finance tranche and a five-year, $650 million working capital piece. The lines have a spread of LIBOR plus 55 basis points and LIBOR plus 75 bps, respectively. The $650 million tranche is also Mexico's first non-amortized five-year deal. "Its is a security line that gives the company cash when needed and can be used up to five years from now." The facility replaces two existing banking facilities with European, American and Japanese banks and a U.S. commercial paper facility.

The transaction attracted a total of 27 participants and was increased from $1 billion due to oversubscription. Barclays Capital, Bank of America, HypoVereinsbank, BNP Paribas and Mizuho Bank led the facility. "We usually try to give our relationship banks a lead arranger role," Alazraki noted. Banks came into the transaction on a pro rata basis, placing their assignments evenly between the two pieces. No commitments were accepted into the three-and-half-year piece only, he explained.

"[The transaction] was very [well] accepted in the market," said Jaime Frontera, head of loan sales at Barclays. After a slow first quarter in the syndicated loan market, volume is increasing as Latin American blue chip companies recognize investor interest in high quality assets in the region, he noted. "The arrangers recognized the opportunity and communicated to the issuers it was a time for longer tenors and aggressive pricing," he added.

ABN Amro, Bank of Tokyo Mitsubishi, BBVA, BSCH,Caja Madrid, Citigroup, Deutsche Bank, Dresdner Bank, HSBC, J.P. Morgan, Scotia Capital, Standard Chartered and Société Générale were arrangers. UFJ was co-arranger. ANZ, Bank of New York, Landesbank Rhienland-Pfaltz and West LB came in as managers and Helaba and Lehman Brothers were participants.