Pemex Sells $2 Billion of 10.5-Year Bonds in International Credit Markets

Petroleos Mexicanos, the state-owned oil company, sold $2 billion of bonds in overseas markets after its benchmark yields fell to the lowest level in almost six months.

The Mexico-City based company sold 10.5-year securities to yield 250 basis points above U.S. Treasuries, according to data compiled by Bloomberg. A basis point equals 0.01 percentage point. Deutsche Bank AG, Goldman Sachs Group Inc. and HSBC Holdings Plc arranged the sale, said a person familiar with the offering who declined to be identified because he’s not allowed to speak publicly.

Pemex is tapping the market after the yield on its 6 percent bond maturing in 2020 fell to 5.22 percent yesterday, the lowest level since the company issued the notes in January, according to data compiled by Bloomberg. Latin America’s largest oil company sold debt abroad after the Mexican government issued 850 million euros ($1.1 billion) of bonds last week.

“When the government issues bonds, Pemex follows to take advantage of the window that opened,” says Eduardo Suarez, a Latin American debt strategist at Royal Bank of Canada in Toronto. “Yields around the world are low and this is consistent with Pemex’s plans to fund themselves.”

Pemex is seeking to finance at least half of its $19 billion capital budget in local and international debt markets this year as the company attempts to slow a decline in output.

Eduardo Marin, a Pemex spokesman in Mexico City, didn’t return a phone call seeking comment.

To contact the reporters on this story: Andres R. Martinez in Mexico City at amartinez28@bloomberg.net; Gabrielle Coppola in New York at gcoppola@bloomberg.net

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