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Volkswagen has done its second Polish zloty trade in one month: a Z100 million 3-year note, which pays a final coupon of 15.20%. The trade comes during a tough time for the automotive sector. Albrecht Moehle, head of capital markets at Volkswagen Group, says: "The troubles of the big three have destroyed our margins. The difference for Volkswagen is that we do not need the money. The big players often come to the market but we will not pay 77 bps for a 3-year floater. Nevertheless we are happy with our deals in 2000 but there is no doubt that in our industry it is getting more difficult to achieve your levels."

Volkswagen has increased the limit of its euro1.5 billion ($1.42 billion) debt issuance programme to euro3 billion. The programme has $1.24 outstanding off 17 trades.

Volvo is to sign a $1 billion Euro-CP programme in the middle of February. SEB Debt Capital Markets is the arranger and the dealers are Citibank, Lehman Brothers, UBS Warburg and the arranger. It will replace its existing $1 billion Euro-CP. Barclays Capital and Credit Lyonnais, both on the old programme, are the two dealers not to make it onto the new panel.

Vorarlberger Landes- und Hypothekenbank (Vorarlberger) has done a euro600 million ($571.2 million) benchmark trade off the revived Pfandbriefstelle set-up which offers investors a wide choice of guarantors. The deal was led by Credit Suisse First Boston and has a coupon of 3m Euribor flat. The issue price was 99.88% and it has tenor of five years. Markus Seeger, part of the treasury team at Vorarlberger, says: "We saw good demand at the end of 2000 for this product and so decided January would be a good time to do the benchmark issue. Structures will have to wait though, as we have to take this format to investors step-by-step." The issuer also did a five-year Z100 million ($24.30 million) trade via Deutsche Bank. It has a coupon of 12%.

Warburg Pincus is to take a 42% stake in investment management firm New Flag Asset Management, investing Eu6.7m in the company. New Flag, which was founded by Pierre Oliver-Masmejean and Anton Simon in 1998, is one of only a couple of asset managers dedicated solely to the European high yield markets. Anton Simon told EuroWeek that Warburg Pincus's involvement will make an important contribution to New Flag's standing in the market. "We have the skills and 36 years of experience between us in investing in high yield," he said, "but for institutions that do not know us, Warburg Pincus is an institutional backer of huge repute and will therefore give us a lot of credibility."

After a quiet start to 2001, the bond markets exploded this week as triple-A rated borrowers and emerging market sovereigns sprang into action. DaimlerChrysler stole the limelight by attracting over $25bn of orders for a $7.1bn multitranche issue in dollars, euro and sterling, proving that investors are still prepared to buy beleaguered corporates if the price is sufficiently cheap.

Belgium The long awaited Eu300m credit facility for Brussels International Airport Company (Biac) has been fully underwritten and launched by arrangers KBC Bank (joint bookrunner, facility agent and documentation agent), Lloyds TSB (joint bookrunner), Sumitomo Bank (joint bookrunner) and Caja Madrid.

The covered bond sector moved up a gear this week as over Eu9bn of bonds hit the euro market. Hypothekenbank in Essen AG launched the joint biggest jumbo Pfandbrief ever, a benchmark Eu5bn January 2011 deal. Joint leads Barclays Capital, Commerzbank and Schroder Salomon Smith Barney reported strong orders for the deal despite the size.

Inter-American Development Bank (IADB) has signed and self-arranged a global debt programme that replaces its Euro- and US MTN shelves. The new facility has no size limit or dealer panel. Hakan Lonaeus, chief of funding at IADB, says: "This facility streamlines our two existing shelves and essentially simplifies the documentation." The inaugural trade, a $2 billion five-year deal, was done last week via ABN Amro and Merrill Lynch. It is expected that the facility will be used to find most of the issuer's $6 billion to $8 billion funding requirements during the year. Lonaeus says: "The Aussie dollar and Taiwan markets will be accessed with our domestic programmes in those countries, but otherwise we will access any currency with this programme depending on the arbitrage opportunity."

Three deals from Irish issuers are part of the healthy pipeline building in the subordinated bank capital market at the start of 2001, according to originators. However, investors may have to wait until February and March before the primary markets pick up a head of steam, despite the activity already underway in other sectors of the market.

Islandsbanki-FBA came to the market for the first time this year with a one-year $15 million FRN. The trade is unstructured and pays interest quarterly. It was unsyndicated and Lehman Brothers was the dealer. Ingvar Ragnarsson, senior funding manager at Islandsbanki-FBA, says the expected amount of funds to be raised off the programme this year is euro700 million ($664.33 million).