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MONTHSPemex starts US$8bn
bookbuilding exercise
MEXICO Fitch downgrades oil producer to BB+Mexican oil producer PEMEX’s US$8bn bank loan
book has started taking shape after launching
into general syndication last week.
The deal was opened to lenders in Mexico City
on Tuesday before the state-owned company
presented the terms to financial institutions in
New York.
Global coordinators JP Morgan, HSBC and
Mizuho officially launched the transaction on
May 15.
BBVA, BNP Paribas, MUFG and SMBC
have joined the facility with US$550m tickets
apiece while Bank of America Merrill Lynch has
committed US$375m at mandated lead arranger
level.
Commitments are due June 20.
The trio of leads underwrote the transaction
with equal US$2.3bn tickets and are expected to
reduce their commitments to around US$600m
each.
“It’s not a slam dunk. Pemex is not the most
straightforward credit,” a banker said.
On Thursday, Fitch downgraded Pemex to
BB+ from BBB- after the ratings agency cut its
sovereign parent Mexico rating to BBB from
BBB+ due to external threats from trade tensions
with the US, domestic policy uncertainty and
fiscal constraints.
On Wednesday, Moody’s also moved on
Pemex, changing the company’s outlook to
negative from stable. It kept the company’s Baa3
rating intact, however.
The company’s planned capital investment,
meanwhile, is expected to fall well short of
replacing oil reserves for 2019 and 2020,
Moody’s said on June 5.Despite implementing some cost-cutting
measures and receiving moderate tax cuts from
the government, Pemex has severely under-
invested in its upstream business, such as oil
exploration and production, and this could
lead to further production cuts and a decline in
reserves, Fitch said in its report.
Banks, too, remain heavily exposed to Pemex
through a number of ancillary business lines that
Pemex conducts with financial institutions. The
state-owned company is roughly US$106.5bn
in debt.BIG ASK
Pemex is tapping its relationship banks to
refinance a chunk of liabilities, a big ask when
there is minimal visibility over Pemex’s oil
refining capabilities and doubts over future
revenue for a company that was once a darling
among fixed-income investors.
The two-part financing that will generate
US$1.5bn in new money comprises a US$2.5bn
term loan and a US$5.5bn revolving credit
facility, both with five-year tenors. It is expected
to provide Pemex necessary breathing room
to cover the US$1.5bn revolver maturing in
November and US$5.25bn in credit facilities that
roll over in January 2020, according to LPC data.
Pemex’s new US$8bn financing is the largest-
ever of its type for the company and it pays
235bp over Libor, which some banks consider a
premium to relative debt offerings, according to
bankers. Pemex’s US$1.5bn revolving credit line,
maturing in November and signed in 2016, paid
185bp over Libor.
Michelle Sierra, Aaron WeinmanUS LEVERAGED LOANS
BOOKRUNNERS: 1/1/2019 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)
1 BAML 220 38,815.42 11.6
2 JP Morgan 190 34,133.18 10.2
3 Wells Fargo 157 29,887.55 9.0
4 Citigroup 96 20,085.02 6.0
5 Barclays 73 14,188.51 4.3
6 Credit Suisse 66 13,300.16 4.0
7 Goldman Sachs 75 13,076.17 3.9
8 Deutsche Bank 75 12,715.08 3.8
9 PNC Financial 75 9,684.60 2.9
10 RBC 52 9,486.36 2.8
Total 796 333,256.52
Excluding Project Finance.
Source: Refinitiv SDC code: P2