Pemex Loan Gets Mixed Reviews

Mexico’s Pemex received a high turnout at last week’s New York bank meetings to launch a new jumbo loan, though bankers express mixed views on pricing. The Mexican oil producer seeks retail participation on a $3.25bn dual-tranche loan. The first tranche is a $1.25bn 3-year revolver, to re-finance a loan maturing this month, for which it is offering 125bp over Libor. Bookrunners are Barclays, BBVA, Credit Agricole (admin agent) and RBS. It is also wants a new money 5-year term loan for $2bn at L+150bp. BBVA (admin agent), BNP Paribas, Credit Agricole, Citi, HSBC and Inbursa are bookrunners. The revolver is to refinance a loan taken in 2007 for $1.25bn that was priced at Libor plus 20bp. Fees for participation in the revolver range from 25bp-60bp for $100m, $75m, $50m and $35m tickets. On the term loan, fees range from 45bp to 85bp for $150m, $100m, $75m and $50m commitments. One banker says the refi should see demand, as lenders look to maintain Pemex exposure. A syndicate banker based in Mexico adds that he expects local participation to be high, since it is seen as government risk. A Mexico-based banker looking at the trade says pricing is in line with the market, as he considers it a top corporate credit. However, a New York based potential retail participant disagrees, saying that with Pemex’s oil reserves declining, refineries in need of upgrades and increasing violence in Mexico, it looks tight. Another retail banker says he will not be participating in the transaction as there is already ample availability of Pemex. Current cost of funding for banks is another concern among potential participants, with one saying the spread on the 5-year is what current costs of funding are for 3 years, which make it unattractive for retail. He adds that the spread would have to be double to make it attractive to retail.