Gazprom, Pemex Bonds Are Attractive, GoldenTree’s Tananbaum Says

Bonds of Russian gas company Gazprom PJSC and Mexico’s state-owned oil producer Petroleos Mexicanos are attractive, said Steve Tananbaum, managing partner of the $25 billion hedge fund GoldenTree Asset Management.

Bonds of both firms are trading at wide spreads compared to their respective countries’ government debt, Tananbaum said Thursday in an interview at the 2016 Milken Institute Asia Summit in Singapore. GoldenTree currently holds Pemex bonds.

“What we are very excited about is the difference in yield between companies like Pemex, that are fully-owned by the Mexican government, or Gazprom, relative to the sovereign,” Tananbaum said. “And we think that’s because the low energy price requires additional capital, and that additional capital is through the issuance of bonds because they don’t have equity.”

Pemex’s 6.875 percent notes due August 2026 yielded 5.27 percent as of Sept. 15, giving investors a spread of 358 basis points over Treasuries. Mexico’s 2026 dollar bonds pay 3.34 percent yield or 165 basis points over like-maturity U.S. government debt.

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