Pemex likely to stick with USD, MXN markets in 2013

Fri Dec 14, 2012 3:05pm EST

Dec 14 (IFR) - As it has this year, Pemex will likely stick mostly to the US dollar and MXN markets for funding in 2013, with the occasional opportunistic tap elsewhere, company treasurer Mauricio Alazraki told IFR.

Although the state-owned petroleum giant's budget has yet to be approved, Alazraki anticipates Pemex will have funding needs of around USD9.5bn-USD9.8bn in 2013.

That figure covers amortizations plus net debt of anywhere between USD3.3bn and USD3.5bn at the corporate level, not including needs for projects.

"It is going to be similar to last year. We are looking at local markets and the dollar markets. It is likely we will do something again with ExIm. Those will be the core market," Alazraki said.

"We would look at other markets, but it will be more opportunistic than strategic."

Last year, the state-owned Mexican oil company accessed the Swiss franc and Australian dollar markets, but largely raised dollars, including several US ExIm-guaranteed deals and a new 2044. In November, it also printed the largest corporate issuance ever seen in Mexico's local markets -- a MXN25bn dual-tranche offering.

At the time it was thought that the issuer would also retap its 10-year global depositary note (GDN) in an effort to deepen liquidity for a note designed to attract both foreign and domestic investors. But Pemex may also consider the structure inaugurated by telecom America Movil in December, when it issued a MXN15bn (USD1.2bn) 10-year bond that was listed with both Mexican and US regulators.

The structure could prove to be an elegant solution to overcoming difficulties bankers have had in creating a local currency instrument that is liquid enough to have broad appeal among both foreign and domestic buyers.

"We do want more foreign investors in the pesos deals, and we do need to enhance the liquidity in whichever format or listing we do," said Alazraki. "We will see if the GDN is right or we will consider something similar to America Movil."

Meanwhile, the borrower is likely to stay clear of the loan market next year after recently completing a USD1.25bn five-year revolver. The bond market continues to be a more efficient and cheaper way to cover financing needs, at least at the corporate level.

"We have one of the tranches amortizing in 2013 but we don't plan to do a syndicated term loan next year," Alazraki said. "The cost of funding for banks has gone up, and it makes more sense to do corporate funding in the capital markets and leave bank balance sheets for project finance, which at initial phases are difficult to fund in the markets."

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