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Bulgaria is awaiting a presidential sign-off before fleshing out a partial exchange of its Brady bonds into new euro and dollar benchmarks through arrangers Citigroup/SSSB and JP Morgan. The surprise announcement last Friday that the republic would go ahead with the exchange immediately boosted the market. The Discs - thought to be the most likely target of the exchange - rose three points to 91.4.

* Bank of Nova Scotia Rating: Aa3/A+

The cross-over credit market has been keeping European high yield fund managers busy, as investment grade companies that face liquidity pressure, slipping confidence or downgrades begin trading inside their territory. Single-A rated Swiss industrial ABB is one of the widest trading euro investment grade names, its March 2004 priced at 789bp over as of March 5 (see chart). At the same time, investors in both high yield and triple-B paper have welcomed a pick-up in new issue supply. Anthony Robertson, portfolio manager at New Flag Asset Management, said that there were good opportunities for the high yield market and a lot of "name trading" in fallen angels (investment grade companies downgraded to high yield, sub-BBB ratings) and investment grade credits priced at 300bp or more over Treasuries, the threshold spread for high yield investors. Among the lower investment grade names worth watching, he listed BBB- French chemicals company Rhodia, BBB US packaging company Sealed Air, BBB- retailer Toys "R" Us, BBB- industrial conglomerate Fort James, as well as two fallen angels, German television broadcaster ProSieben and clothing retailer Gap. Access to commercial paper and short term liquidity issues had been a common theme in the cross-over market, said Robertson.

UK utility Scottish Power astonished the City last Friday (March 8) by announcing that it would sell its subsidiary Southern Water to First Aqua, a special purpose company backed by Citigroup/SSSB and Royal Bank of Scotland.

UK utility Scottish Power astonished the City last Friday (March 8) by announcing that it would sell its subsidiary Southern Water to First Aqua, a special purpose company backed by Citigroup/SSSB and Royal Bank of Scotland.

SNS Reaal Group has added Credit Suisse First Boston as a dealer to its euro1 billion ($875.79 million) debt issuance programme. The facility was signed in January last year via ABN Amro. It has $939.80 million outstanding off 11 trades. The Dutch borrower closed an 18-month euro200 million deal this week.

New issuance continued to exert a downward drag on dollar swap spreads this week, despite countervailing influences. At the close yesterday (Thursday), the five year midmarket was 62.5bp and the 10 year was 69bp. The five year is a shade firmer than a week earlier, while the 10 year is 1bp weaker. There was a wave of new debt priced this week as corporate treasurers sought to take advantage of the attractive conditions. Investment grade spreads are tighter than they have been since the end of last summer, while absolute yields remain low, tempting borrowers to get their 2002 funding completed sooner rather than later.

Our comments last week about Nestlé chairman, Rainer Gut, emerging as the new strong man who is about to change the face of Switzerland Inc, have attracted a flurry of telephone calls and e-mails. You would be surprised to know how many CSFB managers rang to say: "Of course I was very close to Rainer when he ran Credit Suisse and we are therefore delighted to hear that he is seen as the power behind the throne." We wouldn't doubt your word for a moment, gentlemen (and one lady), but Rainer Gut's main focus is, we suspect, on the future of Lukas Mühlemann and, in the meantime, your boss is John Mack. As John isn't exactly having an easy time at the moment, why don't you give him your whole-hearted support and please, no more late Valentine cards to Linda Robinson who is embarrassed by her new celebrity status, which now exceeds Madonna. But since we wrote about the eminence grise status of Rainer Gut in Switzerland, we have detected his influence behind a number of interesting developments. Were we simply flying a kite when we suggested that, thanks to a nod and a wink from Mr Gut, CSFB veteran and centi-milllionaire, Ossie Grubel was about to move into high office at Swiss Re? Ossie was nudged aside at Credit Suisse where he made his career at about the time when one pound sterling bought you 12 Swiss francs and Julie Andrews was appearing out of mountain tops in full voice. Rainer clearly didn't approve of Ossie's relegation to the substitutes' bench and with a single snap of the fingers, Mr Grubel will shortly be catapulted on to the Swiss Re board.