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The US Treasury market suffered a major correction this week, pulling global markets along with it. After the release of surprisingly strong NAPM data there was a fierce sell-off. At the same time, stocks enjoyed a frenzied rally. Ten year swap rates climbed 35bp in less than two days, and swap spreads widened in line with the higher yields.

Turkey has capitalised on the continued improvement in the post-Argentina market by tapping its Eu500m 2005 bond for a further Eu300m. The tap was led by Deutsche Bank and Commerzbank, the same pair that launched the original deal in October, ending an eight month hiatus. "The first time round, distribution was driven by Turkish demand," said a banker at one of the leads. "This time it was driven by German demand. This was thanks to two redemptions of Turkish Deutschmark bonds, and the reweighting of the EMBI index."

UK pension funds are set to undergo their biggest change in years - and the transformation could mean higher volumes in the Euro-MTN market. Changes in UK accountancy rules are luring pension funds away from equities into the corporate bond market and, after Boots recently decided to move its entire pension fund into bonds, market dealers are rubbing their hands in anticipation. "The change will drive business in the MTN market," says Gavin Eddy, head of Euro-MTNs at UBS Warburg. "The type of paper that pension funds require would suit utility issuers, which issue at the longer end and ultimately we may see more issuers setting up MTN programmes to meet this demand." The new regulation, which will make the cost of providing pensions more transparent within company accounts, forces funds to match assets with liabilities using a notional double-A rated corporate bond as the benchmark for asset valuation. As a consequence funds that do not have a substantial amount of corporate bonds in their portfolios may experience fluctuations in both their balance sheets and profit and loss accounts. This may pressure funds to increase their holdings of corporate bonds at the expense of other assets. The introduction of the rule, FRS 17, was approved a year ago but was brought to the fore last month when Boots announced that it had moved its entire £

Sole mandated arranger Barclays has closed oversubscribed the £122.5m loan for the HSBC Private Equity led buy-out of Caradon Plumbing Holdings. The success of the deal, which one or two banks initially questioned, is a sign of renewed investor confidence in the UK LBO market.

Globals

Rabobank Nederland was the only issuer to go out past five years. It closed a $15 million 10-year trade via Credit Suisse First Boston. The note pays a fixed coupon of 8.500%. It then becomes floating rate, paying a fixed rate of 11% (which will increase by 50bp every year) minus 12m $Libor flat. The trade is a non-call-one and callable yearly after the first call. Bawag (Bank fur Arbeit und Wirtschaft) closed a $20 million one-year note via Goldman Sachs. The note is a straight fixed rate trade that pays one coupon of 2.315% at maturity. It is the issuer's 38th note this year. IBJ Australia Bank was also at the short end with a $8.50 million two-week trade and Freddie Mac issued a $20 million two-year trade and a $10 million two-year trade. World Bank was in the mid term with a $11 million four-year note, while McDonald's Corp issued a $200 million five-year trade. The non-syndicated trade pays a final coupon of 4.240%.

The private bank sector dominated in the US dollar sector, but supranational World Bank and private corporate Volvo Treasury also closed trades. Volvo Treasury did a $20 million six-month note via BNP Paribas. The note is a straight 3m $Libor +18bp floating rate note. World Bank issued a $250 million four-year trade and Rabobank Nederland closed a $93.31 six-year deal via UBS Warburg. It pays a fixed rate of 5% annually. Dexia Credit Local de France closed a $100 million 10-year note that pays interest quarterly.