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The dollar denominated new issue market is maintaining a brisk pace and much of the issuance is ending up in floating rate. This, more than anything, is keeping a lid on dollar swap spreads. At the end of the week, the 10 year mid-market was around 78bp over Treasuries while the five year mid-market was around 74bp. May has been a record-breaking month in the dollar debt markets. It was the biggest four week period ever, with US companies raising around $80bn in high grade debt. This was twice the volume of May 2000, and surpassed the previous record set in January this year.

The primary market was relatively light this week as underwriters prepare for the new issuance bonanza expected this month, taking a brief break from the record breaking dollar corporate issuance of May. Nevertheless, the dollar market provided opportunities for several issuers to bring Eurodollar bonds to satisfy demand for top quality debt at the short end of the market.

BRE Bank has signed a Eu1.5bn EuroMTN programme, becoming the first Polish financial institution to do so, and only the second sub-sovereign after telecoms company TPSA. The programme, arranged by Morgan Stanley, is registered under BRE International Finance BV, listed in Luxembourg, and allows full flexibility of issuance structure currency. "This programme is our own initiative," said Anton Burghardt, deputy president of the board and head of investment banking at BRE. "We have been relying on the syndicated loan market lately for our funding, but convergence play will make us increasingly expensive for bank lenders, so we would like greater flexibility to tap the bond market."

France BNP Paribas, Deutsche Bank and JP Morgan are close to winning the mandate for the Eu1.2bn refinancing for defence electronics group Thales.

Leveraged loan market investors are awaiting the largest ever leveraged buy-out in the European market after Apax Partners and Hicks, Muse, Tate&Furst announced their £2.14bn acquisition of telephone directory company Yell from British Telecom (BT) this week.