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CONTENTS OF JAPAN FIGHTS BACK: ? Overview: A snapshot of Japan's turbulent market - When economic chaos struck Asia the Japanese Euro-MTN market plummeted. Jo Thornhill examines whether it is ready to climb back up to success ? Changing investor trends - Changes to the Japanese investor base mean different yield requirements and new challenges for borrowers. Niamh Reynolds asks whether this cash-rich society can still provide good quality funding for international borrowers. ? Borrowers optimistic about the future - In a virtual roundtable Jo Thornhill and Harry Wallop put questions to issuers about funding strategies and changing conditions in the Japanese Euro-MTN market. ? Retail investors bank on Euro-MTNs - Wealthy individuals in Japan are hungry for yield and low interest savings policies can no longer satisfy them. Niamh Reynolds looks at what products in the Euro-MTN market can attract this liquid source of funds. ? The paradox of Japanese credit spreads - A sponsored statement from Dresdner Kleinwort Benson ? Issuers bounce back from volatile market - Japanese issuers in the last year have had to cope with yo-yoing spreads and unprecedented downgradings. Harry Wallop asks issuers how they are coping and what they can do to prevent such a situation happening again. ? IPAs assess challenge of samurai maze - The domestic MTN market in Japan is not being exploited to its full advantage. Jo Thornhill investigates the costs and risks involved in the antiquated settlement procedure and discovers opportunities for international agency providers. *** For more information about this supplement, or if you wish to advertise in MTNWeek's next supplement, please contact Francoise Lavergne on +44 7440 6436. ***

Kommunalbanken has come to the market with another yen trade: a 21-year ¥500 million ($4.46 million) note, which pays a final coupon of 4.4%. The note will be issued on January 18 2001. The issue follows Kommunalbanken's three-year ¥600 million note, which will be issued on January 10 2001. Kommuninvest, one of Kommunalbanken's Nordic partners has also been busy in the yen market. It has issued a twenty-year ¥800 million note, which is due out on December 21 2000.

Kingfisher has sold its fifth trade this month making it the most active European corporate in the private MTN market in December. DaimlerChrysler has issued more in terms of volume but no other European corporate has made so many forays into the private market this month. It has raised $169.42 million off its five trades. For its latest trade it chose three-year euro with a euro10.5 million ($10.28 million) note that matures January 21 2004. It follows on the heals of the two-year £

Kommunalbanken is exploiting the activity in Japan with two 20-year ¥500 million ($4.46 million) trades to be issued on December 21 and January 10. They are both private trades issued via Mizuho and Nomura, and both have structures attached with final coupons of 3.5% and 4%. Kristine Falkgaard, foreign funding manager at Kommunalbanken, says: "We have done eight yen trades in the past week and a half, and find the Japanese market still very active in the private placement sector. They are all quite small notes however, and so it is the US that gives us our volume." Venantius is also keen on yen, and will issue its 28th 10-year yen trade of the year on December 28. The ¥1 billion note is callable at six month intervals and has a step-up structure that increases the initial 1.5% coupon by 0.9% each year. The final coupon is therefore 9.6%. It is possible that the amount of the issue will be increased by about ¥500 million before the end of the year, according to Katarina Lovgren at Venantius. The bookrunner was Lehman Brothers.

Moody's Investors Service placed Royal KPN's A3 senior unsecured debt rating and Baa1 subordinated long term debt ratings on review for possible downgrade on Wednesday, citing concern that KPN's debt levels could be higher in 2001 than previously anticipated. The market had anticipated the rating action. "The rating agencies are dealing with an industry wide issue," said Tom Crawley, head of European credit research at Schroder Salomon Smith Barney, "but KPN is the most vulnerable company out of the whole sector.

Argentina Banco de la Provincia de Buenos Aires has completed a $100m one year US commercial paper back-up facility via mandated arranger Barclays Bank (Miami).

Goldman Sachs, JP Morgan, Lehman Brothers and Morgan Stanley dished out their bonuses this week. How generous have these US houses been? Let's just say that Klaus Svendsen, Frair Appleby-Walker and Richard Tynan of MSDW went last night to drown their sorrows at the appropriately named Bleeding Heart restaurant. The Greville Street eaterie is considered to be one of the best in London, and not too expensive either . . . But most MTNers have been too hungover from an endless round of lunches and parties to feel the pain. Lloyds treasury hosted a humdinger of an lunch on Tuesday. Annabel Murday was in charge of keeping the MTNers in order at Lloyds HQ. And she had a battle on her hands with a collection of rowdy (mostly junior) MTNers: BNP Paribas' Katherine Mitchell, Goldman's Anthony Wainer, David Cukierman from Salomon, HSBC's Evie 'Christ-I've-gone-doolaly' Christodoulidou. Sadly, 'A-pose-a-lot' Apostolos from Barclays was not there to add to the Hellic nomenclature fun. But head-girl, Deutsche's Tiina Lee, luckily was there to stop everyone from overindulging on the port and brandy and to bar Merrill's Dean 'the dog' Fogg from throwing bread rolls. Other parties were the JP Morgan's do at the ultra trendy Fabric (making up for last week's less-than cutting edge Sugar Reef). And Planet 2000, which sounds suspiciously like the name of a lap dancing club, was the venue that both ABN Amro on Tuesday, and Lehman Brothers on Thursday chose to boogie the night away in. Steer clear of the Bishopsgate area if you want to avoid a few bitter Lehman bankers, which sounds suspiciously like a few bitter lemons. And Leak, at risk of sounding like the court section of The Times, has a few announcements to make: Henceforth, Julia Ward of Commerzbank will be known as Julia Abbott of Commerzbank. No, she is not intending to team up with Costello. She has returned to the market, fresh from her Maldives' honeymoon, keen to adopt her husband's name. Another market event that Leak wishes to publicise is the MTN drinks that Gavin Eddy (kind chap that he is) is organising on Tuesday, December 19 at Chez Gerard, on Bishopsgate. Rumours are circulating that Gavin is leaving his card behind the bar. Can this be true? And another new name in the market is Emily Mae Edinburgh, who at seven lb must weigh in as one of the more svelte members of the MTN world. She is the daughter of Julie at CSFB and Justin at Bear Stearns. Congratulations to them both. Only a few more years and she will be teaching Simon Hill and Luca Favero a thing or two.

Yves Leysen has joined Bear Stearns as head of debt corporate finance for Europe. He was a senior figure at BNP Paribas, having been head of global derivatives marketing at the old Banque Paribas. His is the latest in a series of senior debt market hires to Bear Stearns' London office. Leysen will be responsible for origination and syndication of debt derivative products. He reports to former colleague Michel Péretié and to Jeremy Sillem, chair of Bear Stearns International Ltd, the Wall Street bank's London subsidiary. Péretié is a senior managing director and heads fixed income for Europe and Asia.

Lithuanian Telecom is looking to issue a Llt100-Llt200m ($25m-$50m) three year Eurobond in early February, having mandated Credit Suisse First Boston (CSFB), Vilniaus Bankas and Suprema Securities as joint leads, with Deutsche Bank as senior co-lead. It will be the first corporate bond issued in litas and eligible for Euroclear's settlement system. It follows the Republic of Lithuania's Llt100m five year bond issue led by JP Morgan in October, which was the first genuine Baltic currency Eurobond.

Merck & Co. has dropped BNP Paribas and UBS Warburg as dealers from its $1.5 billion debt instrument issuance programme. Although the programme was signed three years ago it has yet to issue any debt.