LatinFinance - January/February 2013 - 41

In the first June deal, 45% of the
investors were new to Ex-Im bonds, with
the rest repeat accounts. The next series
saw 77% overlap with accounts invested
in the first series. Most of the demand
came from asset managers, banks and
insurance companies. Crédit Agricole,
Goldman Sachs and JPMorgan managed
the two sales.
“Pemex was the first of its kind,” says
Jia Shan, vice president of EM DCM at
Goldman Sachs. Shan says the series of
deals saved Pemex money, versus taking
out a direct loan from the Ex-Im Bank.
Pemex finished off the $1.2 billion
program with another $400 million sale
in July. The deal got a 1.70% coupon and
counted on about 84% of the June buyers.
Proceeds were earmarked for payments
for US goods and services imports
Pemex and its subsidiaries buy from US
suppliers.
Pemex had raised $6.03 billion
through December of last year. It capped
off its borrowing by raising 25 billion
pesos ($1.92 billion) in Mexico’s domestic
bond market, in a three-tranche offering
that was the issuer’s, and possibly the
country’s, largest-ever domestic sale.
A 11.5 billion peso 2017 floating-rate
bond priced at TIIE plus 18 basis points
and drew 1.5 times demand. A 10 billion
peso reopening of the 7.65%-coupon
2021 fixed-rate bonds came at a 6.52%
yield, and attracting 1.5 times demand.
The retap doubles the outstanding size
of the bonds sold in the GDN offering.
The issuer elected not to offer the
bonds to international buyers this time.
Finally, it issued a 3.5 billion peso 2028
UDI-denominated tranche paid 3.02%.
Banamex, BBVA Bancomer, HSBC and
Santander managed.
Pemex has set a target of borrowing
$9.8 billion for 2013, though that
remained to be approved as of midDecember. If approved at this level, the
state-owned oil company plans to borrow
about $4 billion internationally, mainly
through the US dollar market, though
it will also watch euros, Swiss francs
and other currencies for opportunistic
taps. A retap of the 2044s and returns to
GDNs or Ex-Im funding are likely. On the
domestic side, between $2.5 billion and
$3.5 billion-equivalent is likely. LF	

____________________________________

Sovereign Liability
Management
Republic of Uruguay UYP39.8bn
New Issue, Tender & Exchange

____________________________________

L

ast April, Standard & Poor’s lifted
Uruguay’s credit rating by one notch –
returning the country to investment grade
after a decade of its debt being rated as
junk.
A great part of its return to form was
due to a remarkable dollar-to-peso liability
management operation in December
2011 of a size typically reserved for the
largest sovereign LatAm issuers.

Azucena Arbeleche, director of debt
management at Uruguay’s finance
ministry.
In the first component of the
operation, Uruguay sold 19.06 billion
pesos ($1 billion) in inflation-linked 2028
bonds. The bonds priced at par with a
4.375% coupon and offered little new
issue premium. Next, Uruguay carried
out a cash tender for various US dollar
and euro- denominated bonds, to buy
approximately $1 billion with final
maturities ranging between 2012 and
2036.
Finally, Uruguay offered to exchange
the outstanding 5.0% UI Global Bonds
due 2018 into a reopening of the 2028 to
improve the liquidity of the new bond and
diminish amortizations in 2018 – a high
amortization year.

Arbeleche: going local
The operation allowed Uruguay to
extend duration, de-dollarize its curve,
reduce foreign currency and refinancing
risk and provide liquidity to existing
bonds. It also set a template for other
sovereigns to follow.
“We were able to increase the
percentage of local currency, execute
at time of volatility [the US had been
downgraded and the Greek crisis was
intensifying] in a scenario that was
complicated for local currency issuance,
and we stuck with our objectives,” says

The final result was a new global
inflation-linked 2028 bond with $1
billion coming from new money and
$725 million from the exchange of global
UI 2018. The sovereign also reopened
the 2028 bonds later for $275 million in
cash, bringing the total to the $2 billionequivalent ceiling it had set.
Uruguay was able to up the portion
of local-currency debt in its profile to
47%, while at the same time creating a UI
benchmark in one of the region’s biggest
issuances in local currency; it was also

January/February 2013

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