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Somewhat overshadowed by the giant SCIP transaction, two European auto loan securitisations sneaked into the market this week. The first was Globaldrive BV Series E, a Eu733m issue for FCE Bank, the European arm of Ford Motor Credit. The deal securitised Spanish and Italian auto loans.

Mid Kent Water, the utility bought by WestLB, this week completed a £135m bond issue through RBS's water funding vehicle Artesian. WestLB's asset securitisation and principal finance group bought the utility in March 2001 through , Swan Capital Investments. The bank supplied £120m of senior debt along with a £50m capital maintenance facility, injecting £23m equity. The acquisition was always intended to be refinanced with a securitisation.

Banco Português de Negócios will next week price Chaves Funding No 3, a securitisation of consumer loans and lease contracts via Credit Suisse First Boston. Price talk for the triple-A tranche with expected maturity in 2004 is 35bp over three month Euribor. The single-A Eu19m bond and Eu8m triple-B bond, with maturity in 2006 and 2007 respectively, will be priced in the 90bp and 185bp-195bp over areas. Credit Suisse First Boston will price Euro Multi-Credit CDO, the Eu254m collateralised debt obligation of US and European ABS for Pacific Investment Management Company today (Friday).

Commerzbank this week launched a Eu1.51bn synthetic securitisation of residential mortgages lead managed by Commerzbank Securities. The deal, jointly lead managed by CDC IXIS Capital Markets, is the second time this year that the bank has used the KfW sponsored programme, after Provide Residence 2002-1 in June.

Morgan Stanley and co-manager Sampo Bank last Friday completed the Eu370m securitisation of Finnish forestland for Stora Enso, the integrated forestry products group. The deal is one of a select group of whole business deals to emerge from the continent and the first whole business securitisation of a forestry company.

Level 3 Communications' bank debt received a boost this week from the news that the company has signed a definitive agreement to acquire all the assets of bankrupt Genuity. Traders said that the bank debt rose to the 72 range up from the mid-to-high 60s. In mid-July, the company received approximately $500 million in new capital from Longleaf Partners Funds, Berkshire Hathaway and Legg Mason. At the time, there was speculation that Level 3 would be in position to begin consolidation in the telecom sector. Questions for Sureel Choksi, Level 3's cfo, were referred to a spokesperson, who did not return calls.

Issuance of sterling-denominated inflation-linked bonds is set to at least double next year and this should give the swaps market a boost. Inflation-linked bonds have been relatively uncommon in the sterling market, but pent up demand from pension funds and institutional investors is fueling increased interest from corporate and government issuers in the asset class, according to Mark Capleton, bond strategist at Barclays Capital in London. To date, there has been roughly USD1.5 billion in inflation-linked bonds issued this year and Capleton expects to see USD3 billion plus next year.

The Securities and Futures Ordinance was enacted in March 2002 and is widely expected to come into force by April. The SFO is a major piece of legislation, consolidating and superseding 10 primary pieces of current legislation relating to securities and futures.

"We have an atmosphere of liberalization toward these kinds of products." --Ciriaco Dator, head of banking group sector two, which regulates foreign banks, at the Bangko Sentral ng Pilipinas in Manila, on the reintroduction of foreign exchange products in the Philippines. For complete story, click here.

Bradford & Bingley, a U.K. building society, has entered a cross-currency swap to convert a recent USD500 million bond into a synthetic sterling liability. Peter Fullerton, head of dealing in the treasury in Bingley, U.K., said the thrift issued the bond in dollars to diversify its investor base to include Asian investors, where there was demand for its paper. The thrift had to use an fx swap because its loan portfolio is denominated in sterling. Fullerton said the exchange rate on the transaction is USD1.58, which is the spot rate of Nov. 19, when the bond was issued. The swap also gave Bradford & Bingley a marginal cost saving.

Derivatives powerhouses including Morgan Stanley, Salomon Smith Barney, JPMorgan, UBS, Deutsche Bank and IntesaBCI are pitching collateralized debt obligations of CDOs. One investor who has held discussions with investment banks about the new issues, said these are many of the firms' first such products in the U.S. market.

Alliance Capital Asset Management (India), one of the largest asset managers in India and an affiliate of Alliance Capital Management which has USD395 billion in assets globally, is looking to boost its use of derivatives for its USD550 million bond portfolio. "As liquidity increases we'll be increasing our activity," said Amitabh Mohanty, head of fixed income in Mumbai. He explained the asset manager has only used overnight-index swaps on the back of its bond portfolio. However, the asset manager will enter the derivatives market in a larger way next year as liquidity grows in the developing market. Volume in the interest rate derivatives market has roughly doubled in recent months on the back of rate cuts (DW, 10/13).