Markets soft ahead of busy Wednesday; Croatia launches; Mexichem, BUMA, Banco BMG set talk

By Christine Van Dusen and Paul A. Harris

Atlanta, Oct. 27 - Emerging markets saw some pricetalk, launch and roadshow activity on Tuesday but levels for the most part were weaker as investors continued to digest heavy supply and looked ahead to a Wednesday when details should surface on several issues, a market source said.

"The market's softer for sure," the source said. "There's plenty of supply."

On the radar screen for Wednesday: the $350 million offering of 10-year notes from Mexico-based PVC product manufacturer Mexichem, a dollar-denominated Rule 144A/Regulation S offering from Indonesia-based electrical utility PLN, a $300 million-plus bond offering from Indonesian coal-mining company Bukit Makmur Mandiri Utama (BUMA), and a $250 million bond issue from PT Chandra Asri Petrochemical, a Jakarta-based producer of ethylene and propylene.

"Last week we saw an excessive amount of supply. This week it's more manageable. The market's a little weaker," another market source said. "We'll have to see, but I think as long as there are no issuers coming in trying to do $2 billion, things should hold together."

So while the pace of new announcements is slowing, pricings "will be coming every day this week, including Friday," the source said. "Things are robust."

Croatia launches benchmark

The Republic of Croatia launched a benchmark-sized, dollar-denominated offering of fixed-rate 10-year notes (expected rating Baa3/BBB/BBB-), according to a market source.

The bookrunners for the Regulation S/Rule 144A offering are Barclays, Citibank and JP Morgan.

Lukoil sets tranche sizes

Russia's OAO Lukoil (Baa2/BBB-/BBB-) has set the set the size for its benchmark, dollar-denominated deal at dual tranches of five-year and 10-year notes for an overall amount of $1.5 billion maximum, according to a market source.

Barclays Capital, ING and Royal Bank of Scotland are the bookrunners for the Rule 144A and Regulation S bond offering, which will end its European and U.S. roadshow on Wednesday.

Lukoil is a Moscow-based oil and energy company.

Mexichem's talked at 8.5%

Tlalnepantla, Mexico-based Mexichem set price talk for its $350 million offering of 10-year unsecured notes (Ba1//) due 2019 at the 8.5% area, according to an informed source.

Pricing is expected Wednesday or Thursday.

Bank of America Merrill Lynch is the bookrunner.

"It's moving along well," a market source said. "This is a first-time issuer, so investors are giving them some time."

Proceeds will be used for general corporate purposes, including capital expenditures and potential acquisitions.

Mexichem produces PVC resins, pipes and related products.

BUMA sets talk

Also talking a new deal on Tuesday was Bukit Makmur Mandiri Utama (BUMA), which set guidance at 11.75% to 12% for its planned $300 million to $350 million offering of senior unsecured notes (Ba3//BB-), according to a market source.

Barclays Capital, Deutsche Bank and ING are the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used for debt refinancing, an intercompany loan and working capital.

The five-year bonds, which are non-callable for three years, include a change of control put at 101% if Delta Dunia ceases to own 100% of BUMA.

BUMA is an Indonesian coal-mining company.

Banco BMG talks $300 million

Price talk also came from Brazil's Banco BMG for its $300 million of tier 2 notes (expected Ba3//). Guidance is at the 10.25% area, according to a market source.

UBS, BTG Pactual, Morgan Stanley and Santander are the bookrunners for the Rule 144A and Regulation S deal. The bonds are non-callable for 10 years. Proceeds will be used for general corporate purposes and to increase tier 2 regulatory capital.

The roadshow for the Belo Horizonte, Brazil-based financial services company ends Wednesday in Boston.

Agile Property plans roadshow

Hong Kong's Agile Property will set out on a roadshow Wednesday for an offering of dollar-denominated senior notes (Ba3//), according to a release from the land developer.

The bookrunners for the Rule 144A and Regulation S deal are Bank of America Merrill Lynch and HSBC.

The roadshow will take place in Asia, Europe and the United States.

Proceeds will be used to finance existing and new property projects.

Agile is a property developer in China focusing on large-scale residential properties.

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