Sole arranger HSBC structured a US$500mn multi-sourced ECA-supported financing line for the Mexican oil company Pemex, with the deal signed late October last year.

The transaction stands out in the market as it allows for multiple individual financings supported by various European export credit agencies (ECAs) and some smaller ECAs, to be closed in favour of Pemex under one framework agreement.

The facility has helped diversify Pemex’s financing sources as well as help European companies compete against trading giants such as the US or China when competing for Pemex contracts.

The deal structure has provided a framework under which individual financings are provided to Pemex in a more rapid and efficient way than if each transaction, often relatively modest in size, was closed separately between Pemex and the other European parties involved.

The use of common documentation means that separate facilities can be documented by a short form facility letter within just two or three weeks, once the ECA underwriting has taken place.

The deal structure has helped create stronger links between Pemex and European ECAs, and other smaller agencies, as historically, the Mexican oil company mainly dealt with US Ex-Im or Japanese agencies.

Via this scheme, Pemex has been able to widen the range of its financing sources which is of acute importance to a company with an aggressive programme of capital investment that typically exceeds US$15bn in any given year.

Much of this expenditure is financed, and in light of economic conditions and a relatively inactive bond and syndicated loan market last year, ECA financing has become a more attractive and cost-effective method of raising money.

Sam Lippitt, director, project and export finance at HSBC, elaborates on how this multi-sourced line will help Pemex’s financing efforts: “The multi-sourced line delivers high volumes of export credit financing to Pemex utilising numerous and diverse ECAs, for often relatively modest individual facilities, each of which can be put in place within a couple of weeks of underwriting,” he explains.

“As well as achieving efficient delivery however, the transparency achieved by controlling all European ECA activity through a single conduit has made it possible for HSBC to negotiate in order to agree common and optimal terms for Pemex across all these agencies.”

The facility not only aids Pemex’s financing capabilities but makes it easier for the European agencies, and in turn European companies looking to build relations with Pemex, to get deals signed.

Lippit explains: “This structure has also effectively created a ‘one-stop shop’ model for European export finance. This enables European companies exporting to high volume procurers such as Pemex to compete on level terms with those belonging to larger individual trading blocks with a single ECA, such as the US, Japan and increasingly China.”

The facility has proved to be a success to date with the original US$500mn line already oversubscribed.


Deal information

Borrower: Pemex
Amount: US$500mn
Mandated lead arranger: HSBC
ECAs: Atradius, Cesce, Coface, ECGD, EKF, GIEK, Sace
Law firms: Various according the ECAs used
Tenor: Up to 10 years from delivery
Date signed: October 20, 2009