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The mauling that bank shares suffered last week made September 1998, after the crash of Long Term Capital, look like the Teddy Bear's Picnic. You could tell that everyone's nerves were on edge, by the calls that kept coming in. JP Morgan was supposedly teetering on the brink. Credit Suisse was staring into the abyss. Commerzbank had taken a direct hit in its credit derivatives engine room and major banks were about to pull their credit lines on Commerz. Deutsche Bank was about to issue a profits warning. Did we know that Citigroup shares were trading below $30?

The corporate bond market was all but closed this week as secondary spreads widened to record highs and swap spreads ballooned to the widest levels seen for months. Ford paper traded on a cash price only as its spreads versus Treasuries traded out to junk levels and concerns grew that the company could be downgraded. Moody's and Standard & Poor's said that a downgrade to junk was inconsistent with their views. Nevertheless Ford spreads widened 150bp on the week. GMAC was dragged in Ford's wake, trading out by 110bp, while DaimlerChrysler gapped out by 40bp. Among the European car makers, Fiat shares fell to 14 year lows and its bonds widened by around 125bp.

Amount: Eu2.32bn

Amount: Eu194m Rating: AAA

Three French corporates awarded mandates this week. The first is a £1bn loan for industrial manufacturer Saint-Gobain. The mandate was clinched by BNP Paribas, Crédit Lyonnais and JP Morgan.

Rating: Aaa/AAA/AAA Amount: Eu1bn obligations foncières

The credit market is facing its worst crisis in living memory. While bond markets have experienced crises before — Asia in 1997, Russia and Long Term Capital Management in 1998 — they recovered quickly.

The credit market is facing its worst crisis in living memory. While bond markets have experienced crises before — Asia in 1997, Russia and Long Term Capital Management in 1998 — they recovered quickly.

EuroWeek hears that Hrvatska Banka za Obnovu I Razvitak (HBOR) is in discussions with its relationship banks about a new facility. This should be larger than its previous $82.5m five year term loan in June, arranged by ING and RZB. Bankers say the facility will have a 10 year tenor and carry a higher margin than June's 80bp over Euribor.

Re-issue notes: A$205.8m Rating: AAA/AAA

William Galvin, secretary of the Commonwealth of Massachusetts, announced this week that he had uncovered damning evidence linking Credit Suisse First Boston to the publishing of misleading research reports in return for investment banking business. A spokesman for Galvin confirmed that all of the materials relating to the latest set of allegations have been turned over the New York attorney-general, Eliot Spitzer.

The City of Prague is making early enquiries about securing a new facility of up to Eu200m. The margin for the deal may possibly be as low as 10bp-15bp over Libor. The borrower is expected to be 20% risk weighted.