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Dollar swap spreads compressed tightly both before and after the surprise decision of the Federal Reserve to slash 50bp from the overnight Fed Funds rate this week. By yesterday (Thursday) afternoon, the five year dollar mid-market had come in to 47.5bp over the new five year Treasury and the 10 year was at 45.75bp over the new 10 year Treasury. Seven days ago, the five year and 10 year swap spread mid-markets were 61bp and 57bp, respectively. Swap spreads are now at the lowest levels seen since before the LTCM crisis of autumn 1998. Although the rolls into the new Treasuries are responsible for 3bp-4bp of the contraction in swap spreads, most of the narrowing seen over the last week needs other explanations.

Rating: A3/A Amount: $500m (increased from $400m)

Amount: Eu1bn Rating: Moody's/Fitch

Amount: Eu125m Öffentlicher Pfandbrief series 58 (fungible with Eu1bn issue launched 06/01/99) Maturity: July 4, 2007

The EuroCP market goes from strength to strength. After a healthy first three quarters to the year, activity has exploded as issuers have flocked to the short end. This rush of issuance has taken overall outstandings to $315bn, a record high for the market, and for the first time outstandings have broken through the $300bn landmark. Over 500 more deals were closed in October than in any previous month and volumes were just shy of $165bn. It was an impressive surge that did not go overlooked. "October saw the biggest jump with central banks in Asia returning to sovereign paper," said John Ford, ECP product manager at Deutsche Bank in London. "Spreads between Eonia and Euribor widened, drawing in many continental European institutional investors in good size." Many dealers predict this trend will continue in November.

The European loan market is preparing itself for the imminent launch of syndication of E.On's jumbo loan facility. Mandated lead arrangers Barclays Capital (bookrunner), Citigroup/SSSB, Deutsche Bank (bookrunner), Dresdner Kleinwort Wasserstein, HSBC and JP Morgan (bookrunner) were in the final stages of discussions yesterday (Thursday).

Rating: Aaa/AAA Amount: Huf4bn (fungible with three issues totaling Huf15bn first launched 03/01/02)

Rating: Aaa/AAA Amount: Ck750m

Rating: Aaa/AAA/AAA Amount: $2bn

Rating: Aaa/AAA/AAA Amount: $500m (increase to issue $1bn issue launched 30/10/02)

Amount: £330.068m Legal maturity: October 25, 2011

Mandated arrangers Barclays Capital (sole bookrunner), JP Morgan and Nordea have launched general syndication of the Eu400m five year revolver for Fingrid Oyj. Before the launch of syndication Commerzbank, Danske Bank and Sampo Bank joined as arrangers. Co-arrangers are being asked to commit Eu25m for 15bp.