Pemex Keeps it Simple with $1bn Retap

Pemex reopened its outstanding 5.5% 2021 bonds Wednesday for another $1bn, locking in sub 5% pricing and its lowest ever yield along this part of the curve. Jumping through the window now meant the state-owned oil company could put most of its external financing needs behind it this year before heading into a blackout period. Whispers of high 190s were seen offering a 15bp-20bp concession to the underlying curve and generated sufficient interest to allow leads to build a $3bn book and upsize the trade from $750m to $1bn. In the end, the BBB/Baa1 credit came at 105.011 to yield 4.835%, or the tight end of 190bp-195bp guidance. “With current market conditions this deal is fair value,” notes a participating investor. Some accounts however simply saw the reopening as too expensive to draw their interest. “There are more attractive credits on a risk return basis,” notes a London EM investor who passed on the deal. “With Pemex coming in at around 80bp to Mexico on a spread basis we didn’t see this as too exciting,” says another investor. Buyers comprised Mexican, LatAm, US and even European accounts. The quasi-sovereign was brought to market by HSBC, Morgan Stanley and Santander. This comes as Pemex looks to tighten margins by another 50bp on an outstanding US$3bn plus dual-tranche loan.