Petroleos Mexicanos, Mexico’s state-owned oil producer, is considering securitizing some assets in a way tailored to attract national pension funds to unlock money for its equipment needs.
Pemex, as the company is known, is reviewing packaging assets or projects into trust certificates or other instruments to tap into the funds from the nation’s growing pension system, Chief Executive Officer Emilio Lozoya and Exploration and Production Director Carlos Morales told reporters yesterday.
Listing assets “can lower the funding costs for Pemex,” Morales said. The company hasn’t decided what kind of securitization it may use and whether it will need to create new companies or trusts as a first step, he said.
Pemex wants to tap into growing demand from pension funds, Mexico’s largest institutional investors, after their holdings of structured assets grew to $6.16 billion in April, or 3.8 percent of their portfolio, from zero less than five years ago. Pemex needs about $2 billion to fund off-shore rigs and $200 million for marine storage facilities, Morales said.
Creating instruments that satisfy demand from the pension funds, known locally as Afores, would reduce financing costs, Lozoya said.
“Without doubt this would be cheaper than a regular credit line,” Morales said.
Toe Matsumura, a stock and REIT analyst with Corp. Actinver SAB said that any asset with a constant flow of revenue can be securitized in a similar way to real estate investment trusts, known locally as Fibras.
You can “offer the market a piece of a building that expects rent payments, the same way you can offer a piece of a rig that is being leased or a highway that is getting toll fees,” Matsumura said.
Mexican pension funds’ total assets under management will increase 80 percent to 3.6 trillion pesos ($281 billion) by 2018, Carlos Ramirez, head of the system’s regulator known as Consar, said March 21.