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Compiled by Holger Kron Deutsche Bank, Frankfurt

A public holiday across most of Europe last Friday meant demand across the EuroMTN market dried up this week. Euro issuance remained strong, however, as German borrowers drove up volumes, accounting for 60% of total issuance. The Landesbanks were particularly active, especially Landesbank Baden-Württemberg which issued six notes, including two for Eu250m. Landesbank Sachsen closed a Eu125m trade via Goldman Sachs. The note settles on May 7, 2004 and was priced to yield 1bp over three month Euribor all-in. Hypothekenbank in Essen closed one of the smaller trades from a German borrower. Its Eu25m note was placed by Deutsche Bank. The note has a short first coupon of 4% and matures in May 2006.

Dollar trading dropped from over 100 trades last week to just 75 deals. Banque et Caisse d'Epargne de l'Etat Luxembourg could hardly be blamed for the fall in issuance. It closed 12 trades for a total of over $100m. Its transactions included a $10.5m step-up range issue that pays an initial coupon of 4% and then pays a maximum of 6.5% after November 21, 2006. The trade was increased from its original size of $9.5m and was lead managed by HSBC. UK borrowers had a quiet week in euros, but were very active in dollars. HSBC issued 12 notes and Lloyds TSB Bank closed four deals. Royal Bank of Scotland was another visible UK name. The bank issued a $10m transaction via Citigroup/SSSB. The note has a five year tenor.

Trading in the EuroMTN market slipped from mid-October's high levels. Just 291 trades were closed this week, falling below the 300 mark for the first time in a month. Trading outside of dollars, euros and yen was particularly quiet. Exactly 100 deals were closed in yen, with supranationals issuing 18 trades for $168.46m. The World Bank was the most active supranational issuer. Among its eight deals was a ¥1.5bn note via UFJ International. The FX/currency-linked hybrid pays annual interest of 3.5% until November 12, 2003, and thereafter interest is linked to the yen/euro exchange rate. The World Bank also issued a ¥1bn FX/currency-linked hybrid linked to the yen/dollar exchange rate. Daiwa Securities SMBC Europe was the bookrunner.

The Province of Milan has signed a Eu300m EuroMTN programme. Dexia Crediop and Merrill Lynch have secured the arrangership and are joined on the dealer panel by Caboto IntesaBci. It is believed that the borrower's first issue will be a Eu170m deal that goes out 20 years.

Bancomext, the state owned Mexican development bank, this week issued the first Euroclearable three year peso deal which bankers hope will help foster an international Mexican peso denominated bond market. Looking to tap a growing group of international investors dabbling in peso denominated assets, Bancomext issued Ps1bn ($97.5m) of three year Euro-peso bonds at 5bp over the TIEE rate, Mexico's equivalent of Libor.

The Inter-American Development Bank has appointed Esteban Molfino as chief of the bank's funding section. He was previously principal funding officer of the capital markets division. In his new role Molfino will be responsible for managing the borrowing activities of the bank in various international and domestic capital markets to fund the bank's liquidity and lending operations.

UK property group Liberty International used Morgan Stanley to lead manage a £159m accelerated bookbuild after its own brokers, Merrill Lynch and UBS Warburg, declined to run the deal. Morgan Stanley won the mandate after Liberty's brokers turned down the transaction because they thought the terms the issuer wanted were too aggressive.

Commentary

Rating: Aaa/AAA Amount: A$100m

Dealer-to-dealer fixed income trading platform provider MTS Group plans to launch a European government bond index, which will use MTS' pan-European tradable prices, and is planning the launch of a platform for trading dollar issues. MTS had 512 member banks at the end of the third quarter - excluding Bondvision its business to consumer platform - up from 448 at the end of last year and 253 at the end of 2000. Average volume in the market taker platforms is Eu2.5m-Eu2.6m daily. Repo turnover is Eu45m, up 51% year on year.

Guarantor: Nestlé SA Rating: Aaa/AA+