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When a low growth company's stock is priced at a high 38.9 times multiple in a floundering market such as Japan's, it's not particularly surprising when it doesn't perform well. McDonald's Japan is in a competitive market with limited growth prospects, say analysts. Yet its shares were priced at an expensive ¥4,300 (US$35.75) when it launched the country's largest IPO this year. With all the hype with which the slick US-controlled company is accustomed to advertising its bargain burger meal deals, McDonald's and its lead managers Daiwa SMBC and UBS Warburg made a point of targeting the retail investor. And they were successful. With a brand name that needed no explanation, retail investors picked up most of the 12 million new shares on offer as well as the 14.2 million privately held shares for sale. Yet their enthusiasm was short lived. Launched on the Jasdaq, Japan's over the counter market, the deal initially enjoyed a 9% rise only to tank in the following days. Retail investors took fright at the overpriced shares and started dumping them in the market, and saw the price fall still further. Notes Takanashi Yanahira, retail analyst at ING Barings Japan: "The McDonald's Japan IPO was successful for this company – given it managed to finance itself at the price it did." He adds: "Obviously it wasn't good for investors."

The Singapore dollar bond market, already the most positive new capital markets story in Asia this year, has broken new ground once again with a S$1.3 billion (US$741.6 million), 15-year non-call-10 subordinated bond issue by UOB. The Singaporean bank issued the bond, the largest ever in Singapore dollars, as part of the financing for its acquisition of local rival OUB. JPMorgan, Merrill Lynch and UOB Asia were joint bookrunners for the upper tier two deal.

Traditional mortgage backed deals and more innovative transactions from the likes of Canary Wharf have put sterling's structured finance market on the map. UK banks and corporates have endorsed the flexible and innovative funding options that securitisation offers - and most have chosen to bring their deals in the local currency. But as supply in the asset backed market looks set to break new records, some concerns have been noted

Until recently, for international houses to even think of competing with UK banks in the long dated sterling market was simply not cricket. But the rules are changing, and non-UK banks these days are showing little respect for conventional roles in this strategically important market. The picture may dismay traditionalists, but even the UK's strongest batters seem unable to prevent international houses - with their beefed-up sterling teams - from picking up business

The UK's leveraged loans market has seen rapid growth over the last five years. Banks can now underwrite over £1bn of debt for a single deal. Lending banks have avoided the trouble afflicting equity and bond markets, and are looking forward to a continuing supply of deals. But the market has been driven by LBO activity, supported by the aggressive private equity sector, where losses are now being reported

The sterling market is under threat from the euro market, which has gained the confidence of international vanilla borrowers and even threatens to compete at the long end of the maturity curve once it gains liquidity. But a more immediate challenge to sterling is posed by its domestic investors, whose insistence on restrictive covenants is turning away potential borrowers

When Glas Cymru approached the sterling market to raise finance for its Welsh Water acquisition, it became clear that its innovative deal could offer rare security to water sector investors more accustomed to shouldering event risk. For the 90 or more institutions that took part, it was an irresistible opportunity, despite the complex 12 tranche structure. With £1.9bn raised, Glas Cymru's work is done for now, but observers are already asking themselves: will the structure catch on to transform the sector?

As those who recall activities of the heroic "architects of value" from Bankers Trust will testify, from a European perspective the UK was where it all began. As recently as 1997, UK borrowers still accounted for 40% of the high yield market in European currencies. By the middle of 2001, their share had been whittled down to 23%.

Despite a pro-euro Labour government returning to power in early June, the outlook for sterling has rarely been brighter. 2001 has seen the total volume of outstanding sterling denominated non-gilt bonds outstrip the government market - an incredible advance within a relatively short space of time for a market that, according to most investors not so long ago, would become more or less sidelined by the new euro market

"What we are hearing from institutions in the UK is that they are increasingly looking for liquidity," says Bob Curry, director, global debt at Dresdner Kleinwort Wasserstein in London. "Issuers looking to raise, say, £100m might well be penalised in terms of pricing unless it is a tap issue or an investor driven private placement. Investors generally see £200m as the minimum size for liquid issues these days, and issue sizes of £300m or £350m are now being achieved by a range of companies rather than just household names, which is great as far as the sterling market is concerned."

Aside from the expansion in issuance of fixed rate corporate paper this year, an important segment of the sterling sector which is also growing rapidly is the market for retail price inflation (RPI) and limited price inflation (LPI) linked bonds, although the market remains small relative to the index linked government bond sector. "As there is still no more than about £4bn or £5bn of index linked corporate bonds outstanding this means that pension funds are still allocating most of their funds on the index linked side to gilts, whereas on the fixed rate side they have a much larger allocation of corporate bonds," explains Paul Stanworth, an institutional investor strategist at the Royal Bank of Scoland. "People have been surprised by how much demand there has been for index linked corporate debt but against the background of FRS17 is it not difficult to see why demand has been so strong."

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