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* Aareal Bank AG Rating: A+ (Fitch)

EuroWeek hears that that no fewer than four banks have won the mandate for the Republic of Romania's minimum Eu500m 10 year Eurobond. The four banks named are Deutsche Bank, ING, JP Morgan and Citigroup/SSSB. "I have heard the same rumour from three different sources," said one banker yesterday afternoon (Thursday). "I also heard they bid fees down to 27.5 cents. Nobody would go lower than that, so I guess there was not much else to separate the four banks."

Gazprom plans to borrow Rb175.5bn ($5.7bn) this year, according to the local newspaper Vedomosti, which was reporting on the company's board of directors' meeting. The plan would represent a considerable one-off spike in borrowing, up $40m on last year, and well above the company's $2.5bn cap on borrowing for 2003.

The European Investment Bank has issued the longest dated bond in the Polish domestic market, a Z275m 15 year zero coupon via Morgan Stanley that is believed to have been sold to one unidentified domestic account. "This issue was driven partly by the investor's need for assets with duration, and partly by the issuer's desire for a deal that would strengthen its visibility and presence," said Filippo Cipriani of Morgan Stanley.

Gazprom is once again set to tap the loan market. EuroWeek understands that the gas company is looking for a $300m facility, although bankers close to the deal believe this could be just the beginning and that it plans to borrow $5.66bn in total this year in various forms. Gazprom will not be alone in the market. Another $1bn of Russian paper, mainly from oil producers and financial institutions, is slated to hit the market in 2002, and bankers have begun to question the true depth of liquidity.

Rexam, the global consumer packaging company, has mandated HSBC and Schroder Salomon Smith Barney as joint bookrunners off its forthcoming benchmark issue. The size and currency of the bond has not yet been finalized but details will follow an investor presentation. It will be Rexam's first issue since it signed its £

Europe’s corporate debt market received a much needed boost yesterday (Thursday) when Imperial Tobacco acquired German rival Reemtsma.

Not many programme signings reveal a deeper meaning about the Euro-MTN market. But the announcement of the State of Hessen's (Hessen) euro3 billion ($2.63 billion) debt issuance shelf last month reflects Germany's growing dissatisfaction with its domestic schuldscheine market and its increasing attraction to Euro-MTNs. But the legacy of success enjoyed in their domestic arena may not be so easy to find in the ever-competitive Euro-MTN market. The schuldscheine market has always attracted its fair share of admirers in the past. Its trades offer more privacy than Euro-MTNs as they are not marked to market and the documentation is flexible and simple. But recent changes have started to drive the German states - one of the market's core customers - away. Hessen started distancing itself from the schuldscheine market as early as 1997 when it first saw signs of trouble, but it still tapped the market occasionally. It now looks set to leave it behind completely. "Schuldscheine was one of our biggest markets in the past but now it is dead to us," Hans-Joachim Soll, head of funding at Hessen, told MTNWeek at the time of signing. HSBC acts on Hessen's dealer panel and it identifies difficulties among the states' investor base as the key catalyst for their departure from schuldscheine. A spokesman from HSBC says: "The German states have to a large part depended on the mortgage banks as the largest buyers of their debt. These mortgage banks have in turn funded themselves via the Pfandbriefe market. As spreads in the Pfandbriefe market widened more than spreads in the schuldscheine market, it has become more difficult for them to justify these purchases." Along with the ever-deteriorating funding levels in the schuldscheine market, the larger states have been forced to look to the international public markets. Most of the states already have experience of the public market through the issuance of eurobonds and the logical next step has been for them to move to Euro-MTNs, which offer a more liquid and a wider international investor base than the schuldscheine market. But according to Stefan Reiner, debt capital market origination at Deutsche Bank, the states will need to adjust their outlook if they are to be successful in the investor-driven Euro-MTN market. "The states can be inflexible when it comes to currency," says Reiner. "They would use foreign currencies but they have rules over exposure - it has to have a swap back into euro attached. And while they have done some structured schuldscheine, it has not been as diversified in currencies as in the Euro-MTN market." And Reiner insists that the states will have to alter their funding levels if they are to be fully embraced by Euro-MTN investors. He says: "While some schuldscheine investors may follow them to the Euro-MTN market, the states' funding levels are still too tough to get them much investor interest. Currently they are not being very open and the very tight levels that they are asking for are just not possible on plain vanilla deals." Land Schleswig-Holstein signed its Euro-MTN programme at the beginning of 1999 but has done just one trade off the facility so far. The Federal State of Saxony-Anhalt's Euro-MTN programme in comparison has been a success. As well as trading in Deutschmark and euro, it has tapped sterling, US dollar and yen. Axel Guehl, treasurer at Saxony-Anhalt, admits that a lot of its success has been because it was able to adapt to the investor-driven Euro-MTNs. He says: "We signed the programme to broaden our investor base. This led us to international investors who prefer MTN instruments to schuldscheine. So it was us who followed the investors, not the other way round." With its large international dealer panel, Hessen is likely to be pushed towards accepting a diverse range of currencies. And the future for the sector on the whole seems bright. HSBC predicts record total debt issuance of euro55 billion from the states in 2002. And it is believed that the larger states such as Berlin and Nordrhein-Westfalen will soon make an appearance on the Euro-MTN stage as well.

Imperial Tobacco launched a £1bn rights issue this week, as part of a combined package to finance the acquisition of 90% of Reemtsma, the German tobacco group. Morgan Stanley, Deutsche Bank and Hoare Govett are underwriting the issue which, according to bankers, will be the third biggest rights issue in the UK.

Bayerische Hypo- und Vereinsbank will next week launch a Eu3bn global Hypothekenpfandbrief, offering investors an attractive spread for a rare 10 year jumbo offering. The issue will form part of the HVB Group's funding strategy. With a funding requirement of around Eu45bn this year, the group is co-ordinating the issuance of its different entities to maintain HVB Group's profile in the markets.

India Arrangers ANZ Investment Bank, BA Asia and Crédit Lyonnais are waiting for responses from two banks before closing the $110m equivalent yen denominated loan for Reliance Industries. The borrower is deciding whether to increase the size of the deal or to scale back allocations as a result of oversubscription.

Kreditanstalt für Wiederaufbau (KfW) this week took a further step in its efforts to penetrate the US investor base with a debut global callable bond, a $1bn three non-call one transaction, led by Bear Stearns and Merrill Lynch. Horst Seissinger, vice president of capital markets at KfW, said that there were three highlights of the deal. "Firstly, we have entered a new segment in the US dollar market with a global callable transaction," he told EuroWeek.