GLOBALCAPITAL INTERNATIONAL LIMITED, a company

incorporated in England and Wales (company number 15236213),

having its registered office at 4 Bouverie Street, London, UK, EC4Y 8AX

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  • BEST EURO-CP HOUSE OF 1999 As the number of banks signalling their intention to rejoin the Euro-CP market increases every day, and more and more issuers are accessing the market, the need to identify top market players is crucial. Research for this award included CPWare data, issuer and dealer opinion and pitches from the top 15 banks. This was a tough decision as the market is so tightly fought-over by a small number of banks with Citibank faring very well. But Deutsche Bank is top of the CPWare arranger league table, with 23 mandates signed in 1999. It also tops this year's dealership table with 46 signings, amounting to a total size of over $30 billion. The bank has been a leader in the market boasting 48%euro outstandings. As the only Euroland bank with an active presence in the market, it has been able to take advantage of its retail network. It's the market leader in Germany and the largest foreign bank in Italy and Spain. It's encouraging a broader marketplace for issuers of all types, including hybrid domestic or Euro- programmes such as those for Belgacom and KPN, which bridge the issuer's investor base between domestic and international markets. The bank also put together asset backed facilities such as that of Bills Securitisation, which securitises pools of German bills of exchange. It is one of the few asset backed, as opposed to credit arbitrage, vehicles in Europe. And Deutsche Bank is a significant contributor to the range of important regulatory reforms to the market. John Ford, head of sales at the bank, chairs the ECP Association. He has negotiated associate membership of ISMA and the monitoring of trades within the Trax system. This will help confer regulated status on Euro-CP and thereby broaden market distribution.
  • BNP Paribas has launched an online Euro-MTN trading system. The internet portal, called MTNMaster, will provide data on issuer requirements and libor targets. It will enable investors to see what issuers need. And it will show investors not only vanilla trades but also structures available through BNP Paribas. It is hoped this will help the process of matching issuers to investors. Daniel Cogoi, head of MTNs at BNP Paribas, introduced the website at the global MTN market conference in London on Thursday, October 12. Interest was shown for the trading system at the conference with many issuers keen to submit their details for the free subscription. BNP Paribas will release further details about the site next week. MTNMaster is the second MTN trading portal of its kind. It follows UBS Warburg's online trading system, which provides information on vanilla trades, launched in October 1999.
  • Bremer Landesbank has increased the ceiling off its euro10 billion ($8.7 billion) debt issuance programme to euro15 billion.
  • Market report Compiled by Frank Hracs, TD Securities, Toronto
  • Caymadrid International has increased the ceiling off its $3.5 billion debt issuance programme to $5.5 billion.
  • Portugal's first private corporate has joined the Euro-MTN market. Cimpor, Portugal's largest cement group, signed a euro1.5 billion ($1.54 billion) Euro-MTN programme on December 23, 1999. Portugal, until last year, had no active borrowers in the MTN market apart from the republic itself. But 1999 saw five Portugese issuers launch their inaugural deal. There is now $8.44 billion-worth of Portugese debt outstanding. Cimpor, rated A- by Standard & Poor's, chose Morgan Stanley Dean Witter as its arranger. The dealers are BCPA, Banco Portugues de Investimento, Banco Santander Central Hispano, Caixa Geral de Depositos, Deutsche Bank, ING Barings, Merrill Lynch, Paribas, Salomon Smith Barney and the arranger.
  • Dealers are leaving no stone unturned within niche sectors as they try to revive the flagging structured market in Europe. Demand for commodity-linked notes, though still very small, is showing promising growth. There has been $69.59 million-worth traded in 2000, according to MTNWare, and dealers report much more. If oil prices remain high many investors could be enticed to take a view on the market. When structured demand is lacking it is important to keep track of where opportunities might lie. Alexis Renard, Euro-MTNs and private placements, at Goldman Sachs, says the desk has managed to do 20 commodity-linked notes this year. But most are unlisted and only one can be seen in MTNWare. He says: "We've seen a big increase in commodity-linked transactions in recent years, particularly this year. Both overall volumes as well as the size of individual trades have risen substantially." Another trader says: "Looking at the volatility of oil prices this year, certain options could be profitable. If an investor is keen to take a certain view, it sometimes helps that the underlying asset is highly volatile because the payoff will be even bigger." One issuer taking advantage of this pocket of demand is Eksportfinans. It did a $21.5 million three-year deal in May this year. Preben Stray, vice-president in the treasury at Eksportfinans, says: "It is a fairly specialized structure but all index-linked notes offer investors a good alternative and the commodity-linked deals are often chosen by investors looking for some kind of hedge." The note was linked to the performance of the Goldman Sachs commodity index (GSCI). This index, which was established in 1992, tracks the returns of 26 commodities including energy products, metals and agricultural products. Renard, at Goldman Sachs, explains why these notes are attractive to some buyers. He says: "One motivation is perhaps fears over increasing inflation. By linking notes to an index such as GSCI portfolio managers have a natural hedge against inflation. Also it's a nice diversification away from the traditional fixed income products." Stray, at Eksportfinans, was comfortable with the deal. He says: "We had done this structure before with Goldman Sachs so the documentation was in place. It's important to be familiar with the structure and to understand the full credit exposure so that the pricing is accurate." But not all issuers are happy doing complex structures since the assets can be difficult to track and price. And investors feel more secure with strong credits, such as triple-A rated Eksportfinans, when buying complicated structures. One dealer says: "Usually investors want a good credit rating like a mid double-A or triple-A. If they're going to take a view on a particular market they don't also want to take a view on a credit. Also these are quite sophisticated structures so it's generally banks that are interested in them." Yet single-A rated SNS Bank managed to seize an opportunity for a euro48.09 million ($45.55 million) commodity-linked note in March 2000. This proves that if an issuer is sophisticated enough to be able to price and track the structure its rating should not be a barrier to trading. Toine Teulings is a dealer in debt capital markets at SNS Bank. He says: "This trade came out of the blue for us but it is nice to know, as a single-A rated issuer, that investors want these types of structures from us. As with any new structure there was a learning curve but it was nicely priced for us and it was well worth doing the trade." And Renard, at Goldman Sachs, believes that as the structure becomes more popular a wider variety of issuers will be able to cash in. He says: "We're doing our best to fully expand our issuer base for these notes. In previous years we only used the obvious three or four highly-rated issuers but this year we've tried to open it up and get more issuers and those of lower credits issuing this structure." Historically, commodity-linked notes have sold to individual investors mainly in Europe and Asia, and were for small amounts. But dealers report that this is gradually changing. One trader at a US house says: "There's been more interest from a wider range of investor types. We've sold these notes to institutional investors and private banks as well as to high net worth individuals this year." But Daniel Cogoi, global head of Euro-MTNs at BNP Paribas, says: "Typically these notes sell to one institutional investor or a single retail buyer, but the volumes are still so small - for example we've only done a handful of these trades this year - that it is difficult to see any investor trends." There is a tone of optimism from many in the market that the appeal of commodity-linked notes will widen. Renard, at Goldman Sachs, says: "From our experience 2000 has already seen substantial growth in volumes of the structure. It's not going to be billions and billions but I expect that it will go on increasing. We now have a better understanding of which issuers can do these notes and we have also significantly increased our investor distribution for the product."