Cleary Gottlieb and Shearman & Sterling are lead advisers on a deal in which Mexican state oil company Petróleos Mexicanos (Pemex) has secured a $5 billion cash injection from the government, as part of a broader refinancing effort as it struggles to service an unwieldy debt load.

Cleary is representing Pemex and the Mexican Finance Ministry, both longtime clients of the firm, in what it described on Wednesday as a series of "landmark" liability management transactions intended to strengthen Pemex's finances.

Pemex is the world's most-heavily-indebted oil company. A mix of ageing oil fields and lack of investment have led to a 14-year slump in crude production for the company. The Mexican government long relied on Pemex revenue to cover nearly half the federal budget; this year Mexico expects oil income, including taxes on gasoline sales, to account for just 17% of federal revenue.

Fitch rates Pemex credit as junk, while Moody's has warned of a possible downgrade for both Mexico and its oil company if Pemex is unable to shore up its finances soon. A Moody's downgrade would likely trigger an obligatory mass sale of Pemex bonds by institutional investors. The state oil company has about $104 billion of debt.

As a quasi-sovereign, Pemex credit carries the implicit guarantee of the Mexican government.

Pemex plans to use the government cash injection to prepay 10 series of global notes due between 2020 and 2023. It will also offer three series of U.S.-dollar denominated global notes, and offer to exchange 15 series of global notes set to come due between 2020 and 2043.

Citibank, Goldman Sachs, HSBC, JPMorgan, Bank of America, Credit Agricole and Mizuho are acting as placement agents for the global notes offering and dealer-managers in the liability management transactions.

Shearman and Mexican firm Ritch Mueller partner Luis Nicolau represented the banks, while Pemex used internal counsel.

The New York-based Cleary team advising Pemex was led by partners Jorge Juantorena and David Lopez, with assistance from partner Jason Factor on tax matters. Cleary partner Nicolas Grabar took charge of advising the Mexican Finance Ministry.