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Market report Compiled by Richard Favis, RBC DS Global Markets, Johannesburg

Whether consumer spending is at a high or a low, "everyone has to eat", as the saying goes among bankers. For that reason, supermarket credits have been seen as a defensive sector that offers stability during periods of market volatility or depression. Of course, the sector is not entirely resistant to negative economic data. However, in a depressed economic environment food remains vital, making it one of the last sectors to be affected by reduced consumer spending. As a result, supermarket bond spreads, while generally moving in line with spreads across the market, are less volatile than other sectors and investors appreciate the protection that affords.

Instituto de Credito Oficial has raised the limit off its Euro-CP programme from euro1 billion ($913.84 million) to euro3 billion. Deutsche Bank has also been added as a dealer. The state-owned Spanish bank has 10 notes outstanding off the programme, worth $528.59 million. The Kingdom of Spain guarantees the issuer.

The Republic of Italy this week re-opened the global yen market, issuing a ¥100bn five year transaction via JP Morgan and Nomura to provide the sector with its first sovereign or supranational benchmark since Canada launched a ¥50bn five year bond in March. The deal was priced at 5bp through the JGB 188. According to Kensey Green, head of Nomura's syndicate desk, Italy was an ideal candidate to re-open the market, being the only foreign sovereign issuer that can boast a full liquid yen curve.

Standard Chartered Bank has increased its debt issuance programme from $3 billion to $6 billion. The arranger off the shelf is JPMorgan, and the programme has almost $2.7 billion outstanding off nine deals.

The loan market is bracing itself again for the fallout from another default with the news that Sabena has filed for bankruptcy protection. According to figures from Dealogic, Sabena has $675.57m of syndicated loans debt outstanding after October 3. The problems at Sabena are linked with the demise of Swissair, which was extended a lifeline in the form of credit from UBS Warburg and Credit Suisse Group, as well as the Swiss government. Swissair has $749.6m in syndicated loans outstanding.

There is a nasty strain of banker's 'flu going around at the moment, probably getting passed around on the term sheets. JPMorgan's Rob Nankivell and Miles Hunt have had it, but they have found the best cure... a stiff drink. They are going out for a swift medicinal pint with the market's most secretive issuers, Abbey National. Barclays's A-pose-a-lot Saflekos has been keeping a low profile lately and even snuck off to the European party capital of Ibiza. But did he have a wild time dancing 'til dawn at one of the island's famous night clubs?... er, no. He had a pleasant time visiting some of the island's 56 beaches. Did you really count them all Apostolos? And a man who does know how to have fun is Merrill's Dean the dog Fogg. The cheeky trader is off for a right old knees up this weekend at a stag party in Amsterdam. He's hoping to arrive back by Tuesday in time to do a bit of work. But Leak suspects that Anthony Everill and Danny will be trading by themselves while Foggy gets over his Dutch weekend. Meanwhile Citibank's Euro-CP salesman, Giles Chapman, has left London and is heading for the bank's Hong Kong office...

The battle lines were drawn this week between Euronext and the London Stock Exchange as both started bidding aggressively for Liffe, the London-based derivatives exchange. Other possible bidders for Liffe include the Chicago Mercantile Exchange, although it is expected that as the competition heats up Chicago will be bid out of the running. The acquisition of Liffe by the LSE is a crucial move in terms of the stock exchange's future competitiveness and survival. One exchanges analyst suggested that without this deal the LSE would be forced to seek a merger with one of the other European exchanges. "In a situation where LSE did not gain control of Liffe it would not be unforeseeable to see them re-approach Deutsche Börse," he said.

The 189 syndicated loans signed in the Euromarket in the July to September period is the lowest number of deals completed in any quarter since 1992, according to figures from Dealogic. Volume has also dropped, from $140.98m in the second quarter to $111.25m in the third quarter of 2001. The quarterly volumes are the lowest recorded since the first quarter of 1999.

The dealer panel off Mercator's euro100 million ($87.93 million) Euro-CP programme (see MTNWeek, issue 241) has been announced. It consists of Bankgesellschaft Berlin, HypoVereinsbank and Westdeutsche Landesbank. Raiffeisen Zentralbank Osterreich is the arranger.

Reemtsma, the world's fourth largest cigarette manufacturer, is being prepared for a Eu1.6bn flotation by majority shareholder Tchibo, the German coffee firm. A spokesperson for Tchibo told EuroWeek that Merrill Lynch had been mandated to advise on the flotation, although no details regarding timing or size were finalised. Bankers suggested that Tchibo was planning to sell around 25% of the company in a deal that will not take place until next year at the earliest.