Pemex Benchmark Sees $8bn Demand

Pemex priced a new $2bn 2023 bond Wednesday, getting $8bn in orders as it took a sizeable bite out of its 2013 financing needs. The UST+170bp yield comes versus a level UST+160bp level seen on the Mexican state-owned oil company’s 2022s. The Baa1/BBB bond priced at 99.724 with a 3.500% coupon to yield 3.533%, tight to UST+185bp-area price thoughts. The bonds were trading flat to slightly up late Wednesday. Investors saw 10bp-15bp concession. “The market has been making space for a Pemex issue and expects them to tighten,” says a participating EM investor. About 300 accounts participated, with US institutional buyers playing a leading role, according to people familiar with the details. BBVA, JPMorgan and Citi led the 144A/RegS transaction. The issuer had an option to exercise a greenshoe of up to 15% during Asian market hours. The deal follows a reopening of Pemex’s 2044 bonds for $1bn in October, which capped off a 2012 where it raised $6bn total, including the region’s first Australian dollar-denominated bond. Envisioning perhaps $4bn in cross-border issuance in 2013, finance officials have said they will monitor the Euro market as well as some South American currencies – Peru and Colombia the most likely – for potential issuance in addition to USD. Pemex also plans to become a more regular Mexican domestic market issuer. The new 2023’s flat secondary levels came as the previous day’s issuance, a $500m 2018 from Banco Davivienda and $300m 2016 from BBVA Continental, were seen trading up just 0.125-0.250 points Wednesday, according to traders. Nevertheless, the pipeline remains full. Peru’s Fondo Mivivienda is expected to raise at least $500m today, perhaps joined by Banreservas and Corp Group and Exalmar, who also completed roadshows this week.