International law firm Milbank, Tweed, Hadley & McCloy LLP, led by Global Transportation Finance partner Drew S. Fine and Global Securities partner Arnold Peinado, recently represented the initial purchasers in three separate offerings of notes by Pemex, Mexico’s national oil and gas company, totaling $1.2 billion. The joint book runners were Credit Agricole Securities, Goldman, Sachs & Co. and J.P. Morgan.
The U.S. Export-Import Bank agreed to guarantee regularly scheduled payments of principal of and interest on the notes. These offerings mark the first time the government-backed export credit agency has extended its guarantee to capital markets transactions not involving the purchase of Boeing aircraft by non-U.S. airlines.
The three series of Pemex notes were issued at coupons of 2.0%, 1.95% and 1.70%, respectively, all attractive interest rates comparable to borrowings by the U.S. government. Most of the purchasers were institutional investors.
The guarantee by Ex-Im Bank was important in enabling U.S.-based suppliers to bid for Pemex contracts against overseas firms backed by their own national export credit agencies. Most of the American companies involved are based in Texas, Louisiana and California. Pemex and its subsidiaries used the proceeds from the sale of the notes to finance the purchase of goods and services from these suppliers.
Pemex is Ex-Im Bank’s largest borrower, receiving $10.6 billion in financing since 1998. These offerings will support operations at Mexico’s largest oil field, the Cantarell Complex; at the Strategic Gas Program, one of the country’s largest gas operations; and a program of onshore and offshore oil and gas exploration.
Mr. Peinado said, “We’re pleased to participate in such an innovative financing in the U.S. capital markets, in which Ex-Im Bank has taken on a pioneering role. This transaction furthers a number of worthy goals, including supporting numerous companies in several U.S. states and helping advance Mexico’s oil and gas industry. Many of the goods and services sold to Pemex come from small businesses that benefit enormously from being able to count Pemex as a major customer.”
Milbank has been involved in a number of recent financings in Mexico. Earlier in July Milbank represented lenders providing a $547 million loan for construction of a deepwater drillship to be built in Korea and leased by Pemex. The Firm also advised an international lender group behind the $378 million financing of a pipeline across the Mexican state of Chihuahua to bring U.S. natural gas to Mexico. In 2011 Milbank counseled lenders behind the $300 million financing of a 450-megawatt power plant in Chihuahua – Project Finance’s Latin America Power Deal of the Year.
In addition to Mr. Fine and Mr. Peinado, the Milbank team included Global Securities associates Kevin MacLeod and Megha Shah and Tax partner Andrew Walker and associate Jonathan Grossberg.
