The original financing for Abengoa and GE Energy Financial Services’ 300MW Nuevo Pemex project closed in June 2010, and featured a 6.5-year bullet maturity. The mini-perm financing gave the sponsors some flexibility in when they would have to refinance. They needed it. About 18 months after closing the original $460.1 million mini-perm, the two began marketing a $600 million bond financing. They mandated Credit Suisse to underwrite the 21-year 144A regulation S issue, which Fitch and Standard & Poor’s rated BBB-.

Abengoa Cogeneración Tabasco

STATUS

Closed 19 December 2013

SIZE

$670 million

DESCRIPTION

300MW, 550-800 tonnes per hour steam plant, with 20-year Pemex service contract

SPONSORS

Abengoa (60%), GE (40%)

DEBT

$670 million

LENDERS

Santander, Banobras, Crédit Agricole

SPONSOR LEGAL ADVISER

Creel, García Cuéllar, Aiza y Enríquez

LENDER LEGAL ADVISER

Galicia Abogados

LENDER INSURANCE ADVISER

Marsh and McLennan

INDEPENDENT ENGINEER

Leidos

EPC CONTRACTOR

Abener Energía

But by early 2012, Abengoa and GE EFS withdrew the US dollar issue. The 144A market was liquid enough to absorb the deal, but not at pricing acceptable to the sponsors.

The bonds that Acciona closed for its Oaxaca II and IV wind farms in Mexico, which priced in August 2012, seem to validate the Nuevo Pemex sponsors' decision. Acciona was looking for, and closed on, $298.7 million for its two contracted plants, but settled on an all-in yield of 7.25%, higher than the 6.25% its bookrunners floated at launch.

Grupo Mexico closed a $575 million 20-year bond issue for two greenfield plants in November 2012. That issue priced at 388bp over the interpolated US treasury for a 5.5% coupon, thanks to strong support from the sponsor/ offtaker. The Nuevo Pemex sponsors are understood to have made at least one other effort, in mid-2013, but again found the pricing too wide.

So in September 2013, the sponsors mandated Santander to lead a bank facility. On 19 December 2013, Abengoa and GE EFS closed a $680 million refinancing – Mexico’s largest power financing in 2013.

Pricing was tighter than on the first deal, which featured construction risk. The construction debt had a pre-completion margin of 412bp over Libor, increasing during operations to 437bp, and finally to 462bp for months 60 to 78.

The dollar-denominated refinancing features two tranches with identical terms but different tenors. The commercial bank tranche has a 10-year tenor, while a loan from Banobras – a Mexican state-owned development bank – has an 18-year maturity. Pricing begins at 300bp over Libor, and increases to 350bp in year six, before rising to 375bp in year 11.

Banobras has the largest ticket – $327 million – and was willing to take more, if needed. The administration of Mexican president Enrique Peña Nieto government has prioritised lending to infrastructure projects, even refinancings for these assets, according to bankers in Mexico City. Banobras has historically been resistant to participating in refinancings, but sponsors have tried to persuade the Mexican government that refinancings would free up bank capital to support construction deals.

Crédit Agricole also joined the Nuevo Pemex refinancing, and contributed $103 million. Santander, as structuring agent, guarantee agent and credit agent, took a $250 million ticket, and plans to syndicate down much of that piece. It expects to ultimately hold about $80 million, after selling the remainder to between two and four banks.

Santander, Banobras and Crédit Agricole all participated in the original deal, which Banobras underwrote on the condition that it lend on similar terms to the commercial lenders. Banco Espirito Santo (BES), Export Development Canada, HSBC, La Caixa and Scotiabank also participated in the construction deal. Santander, HSBC, BES and Crédit Agricole took bookrunner titles, and each wrote $20 million tickets on a bridge loan that helped Abengoa begin construction in late 2009.

Nuevo Pemex is the first power plant that Petróleos Mexicanos (Pemex) has procured. Pemex decided it would be cheaper to buy power from a new private generator than either using its own fleet of small cogen plants or buying power from Mexico’s state-owned power company, Comisión Federal de Electricidad.

The tender process, which ran from 2007 to 2009, suggested that Pemex was warming to increased private investment in infrastructure. In December 2013 Mexico enacted reforms that are intended to open Mexico’s oil and gas reserves to outside investment. The reforms may give infrastructure developers more opportunities to do business with Pemex.

Pemex awarded Abengoa and GE EFS the 20-year power and steam supply services agreement for Nuevo Pemex in August 2009. The 300MW cogen plant, located inside Pemex’ refinancing complex in Tabasco state, uses GE 7FA turbines.