Petróleos Mexicanos in Ps.10 Billion Offering of Debt Securities in the Form of GDNs

December 7, 2011

Cleary Gottlieb represented the Mexican state oil company Petróleos Mexicanos (PEMEX), in an innovative offering of Ps. 10,000,000,000 aggregate principal amount of 7.650% Certificados Bursátiles due 2021 (Cebures), consisting of (i) an international offering outside Mexico under Reg S/Rule 144A of Ps. 7,000,000,000 of Cebures in the form of global depositary notes (GDNs) issued by Citibank, and (ii) a concurrent offering to the public in Mexico of Ps. 3,000,000,000 of Cebures held through Indeval, the Mexican clearing system, and not represented by GDNs. The offering closed on December 7.

The GDNs issued in the international offering are deposited with DTC, and are represented by a restricted global depositary receipt and an international global depositary receipt (GDRs). Citibank undertakes in the GDNs to convert peso payments on the Cebures into U.S. dollars for payment to the GDN holders and is compensated through fees deducted from the payments made by PEMEX on the Cebures. The GDNs issued by Citibank are technically “unsponsored,” that is, they are issued directly by Citibank, without the benefit of a depositary agreement with or any indemnification or other covenants from PEMEX. However, PEMEX agrees, for the benefit of the GDN holders, Citibank, as GDN Depositary, and Banamex, the Mexican custodian of the Cebures underlying the GDNs, to pay additional amounts to the GDN holders in respect of Mexican withholding taxes that are deducted by the Mexican custodian from payments on the Cebures represented by the GDNs. The Cebures contain a tax redemption right, in the event that the rate of Mexican withholding taxes on the Cebures represented by the GDNs exceeds 10%. If PEMEX exercises the tax redemption right, it must redeem all of the Cebures, not just those in GDN form.

HSBC Casa de Bolsa, S.A. de C.V., Grupo Financiero HSBC, and Casa de Bolsa Santander, Grupo Financiero Santander, acted as underwriters in the Mexican offering of Cebures. HSBC Securities (USA), Morgan Stanley & Co. and Santander Investment Securities acted as placement facilitation agents in the international offering of Cebures in the form of GDNs. Morgan Stanley acted as sole structuring agent for the offering. The Cebures were registered with the Registro Nacional de Valores maintained by the Comisión Nacional Bancaria y de Valores in Mexico and are listed on the Bolsa Mexicana de Valores, the Mexican Stock Exchange. It is anticipated that Citibank will make an application to list the GDNs on a European stock exchange for trading on an unregulated market.