LatinFinance - January/February 2017 - 48

PARTING
SHOT
Pushing ahead with its financial overhaul, Pemex
is focusing on debt refinancing, says Juan Pablo
Newman

Liquidity drive
At the beginning of the year, we made deleveraging a priority and
set out several goals.
Our first question was how could we diversify our investor base?
The second was how could we diversify our financing sources
utilizing some of the instruments now available to us under the
energy reform? The third was how could we increase our liquidity?
In that sense, our sale-and-leaseback deal with KKR met all
three of the objectives. It allowed us to finance ourselves with
equity instead of debt and it was a complement to our overall debt
reduction strategy. We wanted to send a message to the market that
Pemex had at its disposal a number of tools to provide the company
with the necessary liquidity.
Thanks to the transactions we carried out this year we were
able to term out our debt coming due in 2018 and 2019, reducing
our repayments by a third. This improved our debt profile and the
credit perception of the company. We have been able to reduce
perception of our risk compared with that of the federal government
in a significant way, nearly by half. We have also taken many other
fundamental steps, including developing a business plan and
normalizing the payment of bills with our providers.
We entered the Japanese market for the first time, and it's a
financing source that really interests us. We'll be watching for
another opportunity. The Japanese market is very stable with very
low interest rates given their financial and economic conditions, and
with an investor base that is totally new for our institution. We had
access to the euro market, where Pemex is developing an important
curve. We also issued in the Swiss franc market. But without a doubt
our three main markets are pesos, dollars and euros.
In December, we carried out a $5.5 billion debt sale that helped
us pre-finance for 2017. It was the largest demand Pemex has ever
received for an issue. We were slightly surprised [by the demand].
We continue to be a frequent issuer, but we didn't think we'd reach
a historical high. That transaction practically covers half of next
year's financing needs and we have a diverse number of instruments
available to us to complete all of the company's financing needs.
But the demand showed that appetite continues and that we

48 L ATINFINA NCE.COM - January/February 2017

"THE DEMAND
SHOWED THAT
APPETITE
CONTINUES AND
THAT WE HAVEN'T
BEEN AFFECTED
BY SOME OF THE
GEOPOLITICAL
NEWS"

haven't been affected by
some of the geopolitical
news. The hydrocarbon
sector isn't included
in NAFTA. It wasn't
included from the start,
so it will avoid any
volatility.
Pemex's finances
are stable. We've
been carrying out the
necessary transactions to
get there. Now we have to
keep working to improve
our financial situation.
Congress has set
our deficit at 94 billion
pesos. The [December]
transaction eclipsed the
amount of our projected
deficit next year. Any
[transactions] we do
from here on will involve
refinancing our debt that
comes due in 2017.
We're optimistic.
I think what you're
going to see in 2017 is
a strengthening in the
profitability and the
financial structure of
Pemex. LF

Juan Pablo Newman is Pemex's chief financial officer. This is an
edited transcript of his comments in an interview with Kevin Gray and
Nicholas Laursen
http://www.LATINFINANCE.COM
Table of Contents for the Digital Edition of LatinFinance - January/February 2017
