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The bulging pipeline of debt that had been spectacularly growing for the past four weeks finally broke over the global capital markets this week. On Tuesday alone, $5bn of new debt was printed in the US high grade sector. There has been prodigious issuance in both the dollar and euro markets with more to come. Ten year dollar swap spreads fell to 124bp over the 5.75% August 2010 Treasury by yesterday (Thursday) afternoon, about 3bp tighter than a week ago. The five year mid-market came to 94.5bp over the 6.75% May 2005 Treasury, almost 2bp tighter on the week.

Supranationals have been rushed off their feet this quarter. Strong investor demand from Japan means printing tickets has never been easier and sterling has provided opportunities too, particularly with reopenings. But some dealers say this high will not last. Some supranationals are even hoping the pace will slow down to let them breathe. The third quarter of 2000 is not over yet but issuance from supranationals already stands at $5.37 billion, compared with $3.06 billion in the second quarter (see graph). One supranational that has been particularly busy is International Finance Corp (IFC). It has raised $930.98 million off private trades (MTNWeek criteria) this quarter. IFC has never issued this much in one quarter before. John Borthwick, IFC's chief financial officer, says private placements have taken off in the past year. He says: "Until about a year ago we weren't prepared to look at smaller trades, because it wasn't economic for us, but we are issuing more now. All our small MTN trades are reverse enquiry, and have been structured to meet the needs of particular investors. We are certainly doing more trades than before, including lots of structures into Japan." And issuance into Japan is mainly investor driven. Japanese buyers like issuers with low credit risk, and the triple-A supranationals have good name recognition as well as being first-rate credits. DKB International (DKB) has been the bookrunner off 26 yen issues for supranational borrowers this year. An official at DKB says: "We have seen a few new investors coming into the market that want strong credit but also want a higher yield from well-known names. The supranational issuers are perfect for these investors, especially as they will normally give liquidity and buy back their own paper if there is no market bid. Selling a structured note by IFC to this investor group is a lot easier than lesser known triple-A rated issuers." Other supranationals agree that issuance has increased. Danielle Coolen-Prentice, African Development Bank's head of funding, says that the last few weeks have been exceptionally busy. So far this year the bank has issued 40 trades, all in yen. But Coolen-Prentice suggests there are other reasons for the strong investor demand. She says: "The first five months of 2000 have been quiet mainly for two reasons: there was an overall slowdown because of low interest rates, and Japanese investors closed their books early for Japan's fiscal year end on March 31. And mark-to-market policies were introduced at the end of March. The investors were very cautious early in the new fiscal year since they needed to analyse the impact of this new rule before buying new structured bonds." But yen is not the only currency to attract supranationals. Sterling tops the currency league for trades issued by supranationals in 2000, with $3.42 billion-worth (MTNWeek criteria). Yen comes second with $3.39 billion. Nordic Investment Bank (Nordic) has issued $1.11 billion-worth of sterling trades in 2000. And it issued more this quarter than in any previous quarter. Kari Kukka, head of funding at Nordic, says: "We have been unusually busy and the reason for this activity is the good opportunities, especially in sterling. That market has been nicely alive and we've done two inflation-linked notes, but mostly plain vanilla." Many trades in sterling have been fungible with trades and bonds issued earlier in the year, or even last year. These are very attractive to investors and IFC has issued three such trades this year. Borthwick, at IFC, explains that they give liquidity to buyers. He says: "There have been opportunities in sterling, particularly fungible trades, because it can raise significant volumes in one issue and the costs are good. There's value for investors in having large trades as it provides them with greater liquidity." Gavin Eddy, head of Euro-MTN trading at UBS Warburg, explains why these are so popular: "Sterling trades by supranationals are mainly reopenings. This is driven by the widening of the swap spread." And there are other reasons why supranationals have been busy. Sovereign issuers are generally borrowing less and the triple-A rated landesbanks are fending off threats to their guarantee system. This may push triple-A investors to alternative issuers. Merrill Lynch has been lead dealer off 13 supranational issues this year, according to MTNWare. Dean Fogg, Euro-MTNs at the bank, says: "Strong demand for supranational and sovereign issuers in sterling is due mainly to the lack of issuance from the UK government - due to revenue from the UK telecom auctions, coupled with growth in the economy. And the need from the pension funds for sovereign paper is forcing spreads ever wider." The question now is whether or not the high level of issuance will continue. Some dealers think it is bound to slow down. Eddy, at UBS Warburg, says: "As long as the swap spread remains wide, investor appetite in the UK will be high. But as soon as spreads come back in, this is likely to disappear." And Coolen-Prentice, at African Development Bank, says: "Issuance might drop off a bit. Even if the fourth quarter only sees half the activity I would still be very happy."

Over $4bn of subordinated debt hit the international markets this week as a broad array of financials tapped into several investor bases to take advantage of investors' growing appetite for bank capital. SanPaolo IMI issued the largest ever lower tier two floater, selling Eu1bn via Banca IMI, JP Morgan and Morgan Stanley. The issue, which was accompanied by a Eu100m tap of the bank's Eu400m 10 year fixed rate bond sold in March, was priced at the tight end of the spread talk at Euribor plus 70bp.

* Europäische Hypothekenbank SA Rating: AAA

* Credit Suisse First Boston and ING Barings completed the SFr310m ($176m) secondary offer for medical technology company Jomed on Wednesday, successfully breaking the company's six month lock-up with a strong acquisition story that enthused investors. The 3.165m shares were priced at Sfr98 from a close of Sfr100 - a 2% discount. All the shares sold were primary with the proceeds going toward the purchase of US firm EndoSonics for $205m. "People were obviously happy with the reasons for the fundraising," said a syndicate official.

Telefónica's foray into the bond markets exceeded expectations yesterday (Thursday) when the Spanish incumbent raised $6bn from investors, with each of the dollar tranches increased by 25%. Bankers said the success of the transaction opened the window wider for other telecoms names, and had helped banish concerns that the large supply now entering the market might fail to find adequate support. But bankers warned there will be no guarantee of success for new issues coming to the market in the absence of generous pricing. The Telefónica issue is the first of $40bn equivalent of telecoms paper set to enter the primary markets before the year is out. But it should come as no surprise if the supply is pushed through smoothly. Telecoms issuers are unlikely to put deals at risk through foolish pricing, and investment bankers will not be worth their fees if the supply is not sensibly staggered. France Télécom, KPN and British Telecom are the remaining issuers lining up for jumbo deals. KPN is looking to sell a minimum of $3bn towards the end of September - possibly divided between five, 10 and 30 year issues in dollars, along with a euro tranche. And like France Télécom and British Telecom, which are planning to issue Eu5bn and $10bn respectively, bankers said KPN will have to pay a higher yield than Telefónica, because of the credit issues surrounding the borrower. One view was that France Télécom will need to price its deal 5bp behind Telefónica, British Telecom 5bp-10bp behind France Télécom, and KPN 5bp-10bp behind BT to attract the right level of investor interest. The high grade telecoms sector is not the only area to have entered a new issue boom. This week issuers in the subordinated bank debt market kicked back the traces, albeit in volumes that cannot compare with the telecoms glut. On Tuesday, SanPaolo IMI issued the largest ever lower tier two floater - selling Eu1bn via Banca IMI, JP Morgan and Morgan Stanley as part of a Eu1.1bn recapitalisation exercise. The Eu1bn floater was oversubscribed to the tune of Eu1.47bn. On the same day, Abbey National issued the largest subordinated bank financing in the sterling market - raising £1bn of upper tier two across four tranches along with a Eu400m upper tier two tranche via Lehman Brothers and UBS Warburg. The deal, announced on Thursday of last week, attracted demand from sterling investors of £750m-£800m over the first two days - reflecting the broadening of the UK investor base for subordinated bank debt and their larger take in the credit markets. In the dollar sector, Barclays Bank issued $1.25bn of Perp/2011 Reserve Capital Instruments (RCIs), marking a new departure for the directly issued tier one capital securities. The self-led deal was priced inside the spread talk at 282bp over the 10 year Treasury. UniCredito is among the banks set to contribute to the large supply of tier one paper over the coming weeks. The Italian bank is planning a deal of about Eu1bn via Merrill Lynch and UBS Warburg. And BNP Paribas, Credit Lyonnais and UBS are also due to issue tier one, with UBS set to raise around $1.25bn. The deal relates to the bank's acquisition of PaineWebber. Credit Suisse, meanwhile, is due to issue $4bn of senior and lower tier two paper following its acquisition of DLJ. At the high end of the credit spectrum, Freddie Mac stole the euro show with its inaugural EuReference Note, a Eu5bn 10 year deal. Priced at 55.5bp over the Bund, or around 6bp through mid-swaps, the paper was snapped up by investors across Europe who, even if yet to be convinced of the true liquidity of the agency's programme, could not resist the bargain pricing. Despite suggestions that the funding level achieved by Freddie Mac after swap was up to 10bp back from its US dollar funding levels, many bankers preferred to wait before delivering their final verdict on the programme. The fourth quarter EuReference Note, most likely a five year, will be keenly awaited as a guide to how much European investors are willing to pay for liquidity.

Fears concerning the avalanche of European telecom supply coming to the dollar market subsided yesterday after investors stampeded into Telefónica's blow-out $6bn equivalent transaction. The offering attracted more than 500 investors worldwide and was increased by $1bn after lead managers Goldman Sachs, JP Morgan and Morgan Stanley Dean Witter built a dollar book close to $16bn and a euro book of about Eu4bn.

Telia, Sweden's incumbent telecoms operator, will spin off its directories unit Eniro in October with an IPO expected to raise about $1bn. Carnegie and Morgan Stanley Dean Witter will be joint global co-ordinators for the deal. The roadshow is scheduled to start on September 21, and last for 2-1/2 weeks.

Turkish officials were keen this week to scotch market rumours that the Republic of Turkey was planning an Argentina-style prefunding blitz. "We completed our $6bn target for the year by August and have a good period of time ahead of us to use as efficiently as possible," Aydin Karaoz, director general, foreign economic relations at the Turkish treasury, told Euroweek. "We may by year end go for additional financing, but that would not exceed $2bn."

* Investec Henderson Crosthwaite will close the bookbuilding for the IPO of Music Choice, hoped to raise between £45m and £50m, next Friday. The company, which produces digital music channels, will be valued at around £200m after the sale. The issue will be offered only to institutions and will consist entirely of new shares. Of the money raised, £20m will be spent on marketing, and £20m on technological developments, such as distribution over the internet - Music Choice offers five channels through three portals - and improving the visual display when a song is played on digital television. One possible area of research is interactive television, which would allow the customer to access further information about the song or the band, or even buy the CD. Space might also be used for advertising.

Mandated arrangers Citibank/ SSSB, Credit Suisse First Boston and HSBC Investment Bank will today (Friday) launch a $4.5bn debut syndicated revolving credit facility for Syngenta AG. The facility will be split into two tranches. Tranche 'A' is a $2bn 364 day revolving credit with a one year term-out option and tranche 'B' is a $2.5bn five year revolver.

Uruguay ensured a successful debut in euros this week by pricing a Eu225m issue attractively for an investor base wary of high yielding credits following the recent sell-off in European telecoms deals. The five year 7% deal, led by CSFB and Schroder Salomon Smith Barney, was increased from Eu200m and priced at 99.49 to yield 7.125% or 195bp over the Bobl and 185bp over the Btan, compared with a price talk of 195bp-205bp over the Bobl.