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Activity in the telecom sector moved east this week with the launch to general syndication of PTC's Eu650m facility and the expected launch of a second financing for Croatia's VIP-Net. VIP-Net is owned by Mobilkom Austria (30%), Western Wireless International (19%), Vecernji List (23.5%) and Hvratska Postanska Banka (4.9%).

Merrill Lynch and CAIB began marketing the Eu1.5bn IPO of Telekom Austria this week with a lower than expected price range for the incumbent operator. Bankers connected to the sale stressed the competitive pricing of the 140m share sale. The shares will be priced at between Eu9 and Eu12 each, giving a valuation of 5.5-6.5 times 2002 EV/Ebitda.

Thomson-CSF (Thomson), the French manufacturer of electronic equipment for aerospace, defence and information technology, has signed a euro1.5 billion ($1.29 billion) Euro-MTN programme. ABN Amro arranged the facility and the dealers are BNP Paribas, Chase Manhattan, Credit Suisse First Boston, Deutsche Bank, SG and UBS. Thomson has already issued its first trade off the shelf: a euro500 million five-year note. Florien de La Comble, corporate financing director at Thomson, says: "If we do a public trade it will probably be in euros or sterling, which is an interesting market for corporates. If we issue private placements it will be on an opportunistic basis. We may also swap back because our needs are mainly in euros, then sterling and dollar"

Nowegian incumbent telecoms operator Telenor will brave continuing volatility in the European equity markets and launch its IPO, expected to raise about Eu5bn, in the next two weeks. The Swedish government, which postponed the original plan to raise up to Eu7bn in September, will open bookbuilding on November 13, despite the fact that telecoms companies across Europe are still suffering from the downturn in sentiment that began in March.

Tod's, the Italian luxury shoe and bagmaker, priced its Eu210m IPO in the middle of the range in a bid to gain the stock a strong aftermarket performance when the stock begins trading in Milan on Monday. The success of the IPO, which was priced at Eu40 from an Eu36-Eu46 price range, will encourage listing hopeful Prada (see news in brief).

UK corporates have marched on from their success of last year and are again issuing more debt than any of their European counterparts. Despite only three new entrants into the UK corporate market this year, the sector has issued $11 billion-worth of private notes. But there are signs that UK corporates are too dependent on yen issuance. Over half of UK corporate issuance is denominated in yen. But in spite of this UK corporates have achieved considerable success. Much of this is down to the active approach adopted by UK corporate treasurers to their dealers. Many more of the top UK issuers have shed dealers from their panel this year compared with their European peers. Diageo is one such UK corporate that has prospered in Japan this year. Responsible for such names as Johnnie Walker, Guinness, Haagen-Dazs and Burger King, it has issued nine times off its MTN programme in 2000 and five of these have been yen notes. Matthew Antoniou, debt capital markets manager at Diageo, believes that these brand names have contributed to its success. He says: "In Japan our brands are very well known. If they do not already know the Diageo name, mention Johnnie Walker and they will. That name recognition helps significantly." But a famous brand name cannot attract Japanese investors by itself. In the UK more than half of all corporates that have issued this year have a single-A rating from Moody's. And Sam Amalou, director of debt origination at Daiwa, says: "The driving force for Japanese investors is credit rating and this is more important to them than brand name. The Japanese are very sensitive to credit and look for corporates with a single-A rating, and lots of UK corporates do in fact possess this rating." Although yen has been the overall favourite this year, the volume of yen trades has dropped in the past two months. Issuance in yen reached a high in June when 87% of all UK corporate issues that month were traded in yen. These figures have now fallen sharply with only 20% of UK corporate trades in October denominated in yen. Antoniou, at Diageo, explains the fall off: "Swaps had moved in our favour and we are set up to take advantage of market inefficiencies. With short-dated yen transactions we could arbitrage the FX and swaps market. We have not executed a yen trade for a few months now as the market is not there for us at our levels." Diageo has issued nothing in yen since June, having issued five yen notes earlier in the year. And Scottish & Newcastle (S&N) has not issued yen since April, after selling 15 yen trades earlier in the year. Amalou explains this trend. He says: "In the spring foreign and UK debt was sold as an attractive product, but with the increase in interest rates in Japan domestic products have become more attractive. Coupled with the lack of liquidity amongst investment trusts, which have reported bad performance, yen issuance has slowed." But even though yen issuance has fallen there is still a long way to go before UK corporates manage to achieve long term funding. Only eight of the 224 UK corporate private trades this year have a maturity of 10 years or more. And 73% of all notes have a term of less than two years. But Alan Dick, assistant group treasurer at S&N, says the private market is still the most attractive option. He says: "Now we are actively trying to extend our maturity profile but it is a little difficult for single-A corporates in the longer term. Issuing a public trade would give us the maturities that we are after, but it is simply too expensive." But there is hope for S&N. Issuers have had far more success at the long end in recent months. Issues in the two- to five-year sector have increased by 400% from the first to the third quarter of this year. However all of Diageo's nine trades this year have a maturity of less than two years and it is insistent that it has no need to alter its levels. Antoniou says: "Diageo does not pay up for term trades. Do not expect to see any longer-term vanilla issues from Diageo at current market levels." And Thames Water, which last year managed to raise plenty of long-dated notes has had less luck this year. But Andrew Beaumont, treasury manager at Thames Water claims to be happy with his programme and puts its success down to its relationship with its dealers, even though it shed Barclays Capital from the dealer panel earlier this year. S&N, one of only three issuers amongst the UK's top five to have kept its original dealer panel, is not so content. Dick says: "We have kept the same dealer panel but we are aware of those dealers that are more active for us. Changing the dealer panel is something we have kept on our minds." And UK corporates have a strong tradition of actively managing their dealer group. Six of the top 13 UK corporates have axed their dealers compared to only two of the top 13 European corporates. Diageo believes that this aggressive approach is the best strategy for new UK corporates looking to join this sector, advising that issuers must first decide if they need a dealer panel at all. Antoniou says: "Set objectives for your dealers, hold reviews and let them know that if they do not reach your requirements they will be removed from the dealer panel - you will be amazed at their responses. It's a relationship business, be sure you know them. Have regular contact with your dealers. If not they may forget about you. Make sure this does not happen."

Arranger Deutsche Bank London has launched the syndication of a $150m extendible revolving credit for Ranger Oil (UK) Limited, Ranger Oil (North Sea) and Ranger Oil (PC) Limited, guaranteed by parent Canadian Natural Resources Limited (CNRL). The 364 day facility includes a two year term out option. Margins and commitment fees are determined by a grid linked to the senior unsecured long term debt ratings of CNRL as assigned by Dominion Bond Rating Service and Canadian Bond Rating Service.

Globals * Fannie Mae

* Landwirtschaftliche Rentenbank Rating: Aaa/AAA/AAA

Slightly calmer equity markets this week enabled corporate spreads to improve, but new issuance was light, as many European markets were closed on Wednesday for All Souls. In dollars, activity was subdued ahead of next Tuesday's US presidential election. Improvements in the agency sector were reflected in the successful execution of Fannie Mae's new 10 and 30 year Benchmark Securities. The $5bn 6.625% 2010s were priced to yield 91bp over and the $2bn 6.625% 2030s at 95.5bp over. At launch, these levels were 1bp inside Fannie Mae's outstanding Benchmark Securities in the two maturities.

Deutsche Bank, Goldman Sachs and CIBC have arranged the first European syndication for a co-location borrower. The banks arranged a Eu170m five year loan for co-location European telecom service provider Digiplex. The borrower also took Eu57m from private equity investors (including Carlyle Group) and will use the funding to continue its European expansion. The arrangers were joined by four co-arrangers: Dresdner Bank, Toronto-Dominion, Bank of Montreal and ABB. With these four, the deal is fully funded and unlikely to be launched into general syndication. The facility is divided into two tranches. Tranche 'A' is a five year Eu110m term loan and tranche 'B' is a Eu60m revolver. Both have a margin of 425bp over Libor, racheting on a senior debt to Ebitda grid.

Despite moderate third quarter results, automobile manufacturer spreads have recently begun to tighten after several months of volatile performance. However, concerns over the auto industry in North America remain.