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The Federal Reserve Board disappointed the fixed income market by lowering interest rates by only 25bp on Wednesday. Treasuries sold off for the remainder of the week and the dollar yield curve flattened sharply. Swap spreads were bid up at the end of the week, closing at around 85bp in five years and 87bp at 10 years. However, to some dealers, swap spreads look vulnerable at these prices. The next few weeks are seen as a last chance for borrowers before rates move outside the current trough and the summer lull begins. If there is a period of renewed issuance, the swapping of new debt should put pressure on swap spreads.

The latest figures released by the Centre for Management Buy-outs show that in 2000, Germany surged ahead of the rest of continental Europe in terms of buy-out volume. But the authors of the report suggest that there is still great potential for growth in the market. The leap in volume, according to the report, is largely due to a number of jumbo transactions, which have accounted for more than 75% of the German market by value.

Harsco Corporation (Harsco) has signed a euro250 million ($215.13 million) Euro-CP programme. The arranger is The Royal Bank of Scotland. The borrower is rated A2 by Standard & Poor's and P2 by Moody's. Harsco processes waste materials and also sells other products for the construction industry. The dealer panel is Citibank, NatWest Global Financial Markets and the arranger.

Hamburgische Landesbank Girozentrale's sixteenth note of 2001 is a ¥500 million ($4.09 million) trade that matures in July 2021. It has a final coupon of 3%. Daiwa SCBM was the bookrunner, and the note is callable annually with a power-reverse dual structure attached. Stefan Zegar, part orf the Euro-MTN desk at the issuer, says: "We like the yen market because it is very flexible and there are a lot of structures available."

Recent predictions for the growth of the Hungarian forint in the Euro-MTN market are starting to bear out. Two new trades take the total of forint trades up to 11 so far this year. Only six forint trades have been made previous to 2001. European Bank for Reconstruction and Development is set to issue a Ft20 billion ($70.24 million) MTN on July 5. The one-year note pays interest singularly and has a final coupon of 9.250%. HypoVereinsFinance has gone for a three-year Ft10 billion ($35.12 million) note where the interest is paid annually. The final coupon is 9.000%.

Lafarge has increased the ceiling off its Euro-MTN programme from euro3 billion ($2.58 billion) to euro7 billion.

Barclays's Apostolos Saflekos has been spotted leading the high life in a bar on the Portobello Road in London - not entirely remarkable for an MTN trader, but Leak suspects that Saflekos is trying to get in with the trendy young actors and popstars that hang out in the bar (which is incidentally near the bookshop in the film Notting Hill). He was also seen in a flashy open-top silver sports car, off the Strand careering round a corner so fast his sunglasses nearly flew off - is this a man who wants to be a popstar or what? And talking about the high life, Annemarie Ganatra from HSBC is off to watch the Grand Prix in Magny-Cours in France this weekend with none other than French issuer CNCEP. If suave Cyril Bonnet accompanies her, she's bound to have a nice time. CSFB's Simon Hill is no longer the only MTN trader on the desk. Julie Edinburgh has returned from maternity leave to keep him company. And new issuers Per Schnack and Bo Jagd at Danish Ship Finance celebrated the signing of their Euro-MTN programme on a restaurant on the Thames with JP Morgan Chase's Marianne Okland and Merrill's Rodolfo Diotallevi last Wednesday evening. Leak can't wait to be invited on the next cruise... maybe down the Nile?

Germany Infineon has started premarketing for its Eu1.5-2bn capital increase, led by Goldman Sachs. The deal is expected to be tough, as Infineon's share price has fallen by nearly 50% since April, and the company announced last week that it expected to make a Eu600m loss for the quarter.

Croatia Fitch has upgraded the Republic of Croatia to BBB- from BB+. The agency noted the progress made by the government in clearing K8.4bn of K9.5bn domestic debt arrears, its new IMF agreement, and recent legislation that will cut the public sector wage bill by 10%.

The Norwegian krone market continues to provide arbitrage possibilities for a variety of borrowers. Not only does the currency provide funding at attractive levels at the moment, but investors are also pulled in by the considerable pick-up over euro assets. At the same time, the currency is regarded as a proxy for the euro. General Motors Acceptance Corporation (GMAC) issued a Nkr500m 8.125% EMTN due 2003 via Fortis Bank which was swapped to floating rate dollars, according to bankers.

* Ford Motor Credit Co Rating: A2/A/A+

High grade bond investors swept up paper from Petrobras's $500m 10 year bond issue this week, once again demonstrating the enormous popularity of political risk insurance (PRI) bond structures for certain Latin American borrowers. The deal, led by UBS Warburg, was almost six times oversubscribed and went almost entirely to high grade bond investors dazzled by the large pick-up the deal provided over comparably rated Baa1 paper in the market.