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The markets breathed a sigh of relief this week for two reasons. The Deutsche Telekom landmark issue was not only successfully digested by the market, but it was increased from $8bn to $14.6bn, and all tranches across the four targeted currencies performed extraordinarily well in the aftermarket, most tranches tightening by 4bp-5bp. Plaudits rained in from all quarters, praising the Deutsche Telekom roadshow team for their frank and open discussions with investors and the lead managers for their efficient co-ordination of a complex transaction. The second piece of good news came from the FOMC. On Wednesday, the Fed left its target rates unchanged, but cited some inflation risks so that analysts are anticipating another rate rise of at least 25bp when the Fed next meets on August 22.

Vestel Electronik Sanayi ve Ticaret, the Turkish television and computer manufacturer, this week became only the second Turkish corporate to tap the international bond market with a $200m five year issue. Lead managed by ABN Amro, the B1/B+/BB- transaction carries a coupon of 13.125%, and at an issue/fixed re-offer price of 98.79 offered a spread of 715bp over Treasuries. That was some 15bp wider than where the deal was being marketed last week. However, bankers said that the mere launching of a debut Turkish corporate issue in current market conditions was achievement enough.

* Bank of Scotland Treasury Services plc Guarantor: Bank of Scotland