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First we saw the hotly contested arrangership of Italy's $8 billion Euro-MTN programme go to Morgan Stanley Dean Witter when the facility signed last week (see MTNWeek, issue 88). Now we have the inaugural issue lead managed by Barclays Capital with HSBC as a co-lead manager. There is no time like the present to do an Italian job. It is hardly surprising that investment banks are tripping over themselves to do deals with Italy. Negotiations about a possible Euro-MTN programme were rumoured as far back as 1990, but the climate is now right for Italy to demonstrate its commitment to the international debt markets. The first trade off the facility has allowed Italy to make a rare appearance in the sterling market. The £

Can you believe it? MTNWeek is now two years old and we've clocked up 100 issues. A special occasion like this means we can treat readers not only to a crisp white copy, but also to a look at how the MTN has evolved as a species since 1996. For the most part, it has been a growth market. As well as increasing in size, the MTN has also matured, and now stands as a product in its own right. Outstandings have risen from nearly $700 billion at the end of 1996 to stand currently at $1.25 trillion, according to MTNWare. By 1996 there were 687 active programmes (excluding SPVs) in the market and at present the figure stands at 930. In addition, today there are 64 different nationalities in the market, 10 more than in 1996. We've seen the market weather the Asian storm, move towards Emu on convergence plays, embrace new credits and emerging markets, plus currently, tackle the Russian crisis and its contagion. Most surprising of all is the demise of the yen in such a short period. Yen issuance in volume terms has fallen from $50.7 million for the first half of 1997, to $33.4 million for the same time this year. Coupled with this is the reduction in the Japanese investor base. Together they have been the biggest agents of change in the MTN world since 1996. The fact that Japan is no longer a net lender to international borrowers has caused problems, not least of which is the cancellation of Euromoney's MTN conference in Tokyo and the resultant free trip for dealers and journalists. But, as one expert points out, the damage is manageable. He says: "It's a changing market that moves to meet changing investor demand. Japan certainly won't die." One effect of the movements in yen has been the trend of US borrowers entering the Euro-MTN market. Matt Carter, head of fixed income at Credit Suisse First Boston, (CSFB), says: "The influx of US issuers in the last three years was, to a large extent, driven by the significant volumes which they had seen placed in Japan between '93 and '96. This demonstrated that the Euro-MTN market could offer size to compete with the US market, as well as investor diversification." Since the Euro-MTN market was originally modelled on the US market as a flexible funding tool, it's surprising that it now stands above its parent in terms of flexibility, both for issuers and investors alike. Peter Jackson, head of MTNs at Salomon Smith Barney (Salomon), says: "Lots of nuts and bolts have been added to the product over the years that allow for complex trades. It means that the technicalities are taken care of so we can get on with the more interesting stuff: matching investor views with issuers' funding requirements." Last year began with the signing of Irish Permanent's £

Tyco International Group (Tyco) has signed a euro300 million ($285.84 million) Euro-CP programme. ING Barings is the arranger and sole dealer. It is the eleventh US corporate to sign within the last year. Despite a slow market Tom van den Elzen, senior product manager at ING Barings, thinks Tyco will double its programme size and add to the dealer panel before the end of the year. But he is wary. He says: "The main thing to understand is that although Europe has only one currency, it has many different legal systems to work under. I can't see the market growing quickly enough to attract lots more issuers." Tyco is rated A-2/P-2 and is the world's largest manufacturer of fire and safety systems. It is also involved in healthcare products, flow control and telecommunications. The issuer operates in over 80 countries and its 1999 revenues topped $28 billion.

One of the UK's largest building societies has joined its rivals in the Euro-MTN market. Chelsea Building Society signed a £

Unilever has tripled the size of its $5 billion Euro-MTN programme to $15 billion. IBJ has been dropped as co-arranger, leaving UBS Warburg as sole arranger. Greenwich NatWest has been dropped as a dealer and HSBC has been added.

Lead arranger JP Morgan has set to work on the securitisation of certain products of Rank Hovis McDougall, which has been sold to private equity house Doughty Hanson by UK conglomerate Tomkins. Until the launch of the securitisation the debt will be held among four banks, with no further syndication likely.

THE HIGH GRADE cross-over investor flow the Latin markets have been hoping for all year came into the market in force this week to snap up a $1.5bn 8.5% blowout 5-1/2 year global bond by the United Mexican States.

THE HIGH GRADE cross-over investor flow the Latin markets have been hoping for all year came into the market in force this week to snap up a $1.5bn 8.5% blowout 5-1/2 year global bond by the United Mexican States.

UPM-Kymmene has increased the ceiling off its euro1 billion ($951.1 million) global MTN shelf to euro2 billion.

* AES Drax Energy Ltd Rating: Ba2/BB-

TURKEY'S Vakifbank raised Eu200m via a three year FRN this week, after late demand for the generously priced issue saw it increased on Monday from Eu125m at launch last Friday (July 21).. Rated B1 by Moody's, the deal, which was lead managed by Merrill Lynch, Schroder Salomon Smith Barney and Garanti Bank, was the largest euro denominated transaction by a Turkish non-sovereign issuer.

THE European high yield market absorbed its second chemicals deal this week, as Ciba Specialty Chemicals' former performance polymers division - Vantico - sold Eu250m of 10 year bonds via Credit Suisse First Boston. The issue, which refinances debt from the company's buy-out, was priced with a 12% coupon, to give a spread of 679bp over the Bund.