Mexico Oil Giant Issues New and Retapped Bonds

As anticipated, Pemex has returned to market for a total of $1.5bn in funds. The Mexican state-owned oil producer reopened $1bn of its 5.75% 2018 notes at 99.83 to yield 5.77%, or UST+175bp, after providing guidance of 175bp-180bp earlier in the day. It also priced $500m in new 2038 bonds at 99.699 with a 6.625% coupon to yield 6.640%, or UST+195bp, deciding against a reopening of its 2035s. The two tranches combined saw about 2x oversubscription, according to a banker managing the sale, with demand skewed toward the 2018. The 175bp spread was much tighter than other Triple Bs issuing Wednesday, including BNDES at 237.5bp, bankers note, perhaps limiting demand. Proceeds will go towards Pemex’s investment plan, which calls for raising $5bn this year, including $2bn in the local and international bond markets. HSBC, JPMorgan and Lehman Brothers managed the 144a sale. Pemex originally sold $1.5bn of the 2018 through Credit Suisse, Deutsche Bank and Merrill Lynch in October.