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Latin America - Best high-grade borrower


Petróleos Mexicanos - Pemex, as it is universally known - is the only Latin American issuer in the past year to come to market with a combination of loans and bonds, and with the bonds coming in three different currencies.

Although it is owned by the United States of Mexico, Pemex does not share the sovereign's low financing needs. Like all oil companies, Pemex has enormous capital expenditures that it needs to fund. And unlike most oil companies it has to fund them entirely through debt issuance, since it can't issue equity.

So Pemex likes to keep its funding sources disparate. In December, for instance, it signed a two-tranche, $1 billion syndicated loan: the three-year portion, arranged by JPMorgan and BNP Paribas, paid 65 basis points over Libor, while the five-year tranche, led by Citigroup and Dresdner, paid 80bp over Libor for the first three years, rising to 90bp over for the final two.

Pemex also has a bit of a problem in that it's been issuing for so long that its maturity schedule, especially in dollars, is looking pretty crowded. It has to find odd bits of the curve where it can squeeze in new bond issues: it came with a 12-year bond in December, reopened a five-year in January, and then reopened a 19-year in March.

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