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Telecom Italia made a strong statement about its improving creditworthiness this week by raising Eu2.5bn split between five and 10 year maturities without credit protection language and without paying a new issue premium. The Italian telco borrowed Eu1.5bn over 3-1/2 years at the end of 2001, also without the benefit of coupon step-ups, setting a precedent for the new bonds. Its previous benchmark issues, launched in April 2001, contained provisions for a 25bp step-up in the case of a downgrade by either rating agency.

United Mexican States has raised the ceiling off its global MTN programme to $30 billion from $20 billion. The shelf was arranged by Salomon Smith Barney in 1993 and has $14.80 billion outstanding off 20 trades.

Globals * Fannie Mae

Over $229 million was raised in US dollar off 14 deals. Nordea Bank Sweden issued a $10 million two-year note via Morgan Stanley. The note pays a fixed interest rate. The issuer changed its name in December 2001 from Nordea Hypotek. Rabobank Nederland closed a $45 million seven-year trade that pays a quarterly coupon of 9%. Goldman Sachs is the manager. And Australian public finance company, Export Finance & Insurance Corp (EFIC), tapped the US dollar market for the first time this year with a $10 million five-year deal.

Transactions increased: * New York Life Funding

Corporate issuers led the way by volume although only two of them tapped the market. Toyota Motor Credit Corp closed a $455 million four-year trade via Nomura. The fixed-rate note pays a coupon of 4.050% and is due on January 28. Legal and General Finance was the other corporate name in the market. It issued a $50 million one-year trade. Royal Bank of Scotland issued three dollar trades. One was a $10 million three-year note via Soc Gen. The note is callable quarterly and pays a fixed rate of interest at 5.5% for the first two quarters. Thereafter it becomes a reverse floater. The second was a $5 million three-year range accrual via JPMorgan, callable semi-annually. And Royal Bank of Scotland's third dollar trade was a $5 million five-year range accrual trade via Merrill Lynch, callable semi-annually. Republic of Austria was also in the market with a reopening of a $500 million public trade issued on May 2 2001. The fungible note has been increased to $650 million due to demand from European investors and it pays an annual fixed coupon of 4.5%. Credit Suisse First Boston managed the transaction. European Investment Bank closed a $12 million 10-year, one-time-call, non-call-one trade. The note pays a step-up fixed rate swapped into floating $Libor.

Total Fina Elf contributed over a third of the US dollar issuance with a $300 million five-year trade due on February 12. The note was lead by ING Barings/BBL and JPMorgan. It was not the only corporate in the market. Volkswagen International Finance issued a $100 million one-year FRN due on January 31. In the public bank sector, KfW International Finance did a $100 million one-year plain vanilla trade. The note, done via BNP Paribas, pays a coupon of 2.31% at maturity. Credit Lyonnais Finance (Guernsey) did three $1 million trades, two of which go out three years and the third goes out one year. Morgan Stanley closed two trades for Rabobank Nederland and Council of Europe Development Bank. Rabobank Nederland's $10 million step-up reverse floater is due on February 25 and matures on December 10 2006. It is a non-call-one, with six-monthly Bermudan calls thereafter and it pays a coupon of 7% after one year. The coupon will then be 8% minus the 12m $Libor rate, stepping up annually by 1%. Council of Europe Development Bank's $20 million 20-year note has one call at 10 years and pays an annual fixed rate of 6.33%.

Private banks issued over half of the $350 million-worth raised off the 17 trades that were issued in total. Bank of Nova Scotia closed a $25 million two-year note and public finance borrower, Federal Home Loan Banks, also did a $25 million two-year trade that pays a final coupon of 3.340%. Public bank Banque et Caisse d'Epargne de l'Etat Luxembourg closed three US dollar notes: a $5.75 million six-year trade (with final coupon of 3%), a $4.95 million six-year note (with final coupon of 7%) and a $7 million seven-year note. Council of Europe Development Bank was the only supranational borrower to tap US dollar with a $20 million 15-year note via Salomon Smith Barney. And financial corporate Beta Finance Corp closed a $150 million one-year trade.

The five banks fighting for mandated lead arranger status on Vivendi's Eu2.5bn refinancing are close to taking their places alongside bookrunners BNP Paribas, Deutsche Bank and SG. BNP, Deutsche and SG had thought they had won the mandate for themselves, and were looking forward to arranging one of the largest corporate deals of the year so far. The size of the deal would have translated into healthy league table points.

Sentiment in the dollar market was much improved this week by a $4.5bn convertible bond issue by Ford Motor Co, the largest such instrument ever launched, and by the surprise announcement from Tyco that it is to split four ways and to buy back/tender US$11bn of debt. Auto spreads tightened by 10bp on the back of Ford's successful transaction, and Tyco's dollar bonds tightened by 80bp-100bp versus Treasuries, its euro bonds by 50bp-60bp and its sterling bonds by 80bp.

Morgan Stanley launched a Eu173m equity placement in Sampo, the Finnish financial services group, on Monday. The shares were sold by Varma-Sampo Mutual Pension Insurance Company, which reduced its stake in Sampo by 3.6% to 8.9%. Varma-Sampo said in a statement that it sold the stake to finance its investment in If, the Nordic non-life insurance company. Varma-Sampo also said that the deal would allow it to rebalance its exposure to Nordic financial services in general and non-life insurance in particular.

Austria A bank presentation was held this week for the syndication of the Eu500m five year revolving credit for Austrian utility OMV.