Pemex Said to Sell 1 Billion Euros of 12-Year Securities

Petroleos Mexicanos, the state-owned oil company, sold 12-year bonds abroad today in its first euro-denominated offering this year, according to a person familiar with the transaction.

The company known as Pemex sold 1 billion euros ($1.4 billion) of debt to yield 1.75 percentage points above the mid-swap rate, said the person, who wasn’t authorized to speak publicly and asked not to be identified. Barclays Plc, HSBC Holdings Plc and Morgan Stanley arranged the transaction.

Pemex’s euro-denominated bond sales are part of a broader push in emerging markets to seek financing in Europe as the European Central Bank pursues policies to suppress borrowing costs while the U.S. Federal Reserve reduces its monthly bond buying that lured investors into developing countries’ assets. Brazil’s state-run oil producer Petroleo Brasileiro SA issued in January $5.1 billion of euro and pound-denominated debt, a record sale in Europe by a developing-nation company.

“Latin issuers are increasingly looking to exploit new markets and diversify funding sources,” Jack Deino, head of emerging market debt at Invesco Ltd., wrote in an e-mailed response to questions. “They can get typically long tenors done easier at very attractive all-in yields.”

Emerging-market companies and countries have sold about $30 billion in euro bonds this year, up from $12 billion in the same period a year ago, data compiled by Bloomberg show.

Industry Overhaul

New laws opening Mexico’s energy industry to private investment are spurring demand for debt from the world’s fifth-largest crude oil producer. While the measures will end Pemex’s 75-year monopoly on oil production, the government says it will have more money for new drilling projects and estimates that output could increase as much as 60 percent by 2025. Moody’s Investors Service put the producer’s Baa1 credit rating on review for an upgrade Feb. 6, a day after boosting Mexico’s one level to A3.

Pemex sold in November its first euro-denominated bonds in four years, issuing 1.3 billion euros of debt to mature in 2020. The yield on those securities has dropped 0.63 percentage point since they were issued to 2.6 percent, according to data compiled by Bloomberg.

The oil producer has sold $4 billion of dollar bonds this year, including a record $3 billion sale of 30-year debt on Jan. 15. The third-largest crude oil exporter to the U.S. was the biggest Mexican issuer of corporate debt last year, raising about $10 billion in the international market.

To contact the reporter on this story: Katia Porzecanski in New York at kporzecansk1@bloomberg.net

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net Richard Richtmyer, Bradley Keoun

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.