Medium term note dealers had two reasons to celebrate this week as one sovereign issuer showed it was keen to increase its flexibility while another launched a new programme.

French, Spanish and Irish yields rose sharply at auctions on Thursday, after the US Federal Reserve unveiled plans for an exit from its quantitative easing programme.

The Republic of Latvia has become the latest issuer to enter the warm embrace of a medium term note programme. With central and eastern European credits offering an enticing prospect for private placement investors, other countries from the region should follow suit.

The Republic of Latvia is set to take a more sophisticated approach to the capital markets after launching a new global medium term note programme.

Privately placed euro medium term notes from SSAs are down on last year amid buoyant demand for public deals. But there are still opportunities in an evolving market, as investors and issuers remain flexible, new names launch programmes and traditional euro commercial paper buyers pick up longer dated EMTNs, reports Craig McGlashan.

The Autonomous Community of Madrid’s decision to complete all its 2013 funding in one fell swoop on Wednesday may have left it paying over the odds, bankers warned on Thursday. They said that, with the rally in the eurozone periphery showing no signs of abating, a more staggered approach to funding could have saved the issuer precious basis points.

Central and Eastern European sovereigns could be set for a bumper year in private placements, following the lead of the Slovak Republic, which sold a €1.5bn euro medium term note last week.

The Kingdom of Spain held a less than impressive bond auction this week but the bad news was tempered by a series of successes for its beleaguered regions.

Issuers and dealers were quick to take advantage of opportunities provided by moves in cross currency basis swaps this week, allowing them to get euro commercial paper deals done despite the super tight levels at which many issuers want to fund.

The entry of the European Stability Mechanism as an investor in short dated money market instruments later this month could lead to a further compression in the already meagre yields on offer from short term debt, Eurocommercial paper dealers have warned.

The launch of a new triple-A rated euro medium term note programme from a Finnish agency this week cheered dealers who have been struggling with the worst quarter for public sector issuance since the first three months of 2009.

A week of further eurozone volatility is pushing sovereigns, supranationals and agencies even more towards private placements for funding.