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Europe's cities and regions are drifting into international markets, rather than rushing, as Euan Hagger finds out. But some are blazing the way in attracting international interest A Eu1bn benchmark which the German federal state, Sachsen-Anhalt, plans to raise by the end of March will cap a busy quarter for bond issuance by fellow Länder. As such, the transaction has special relevance, since Sachsen-Anhalt's borrowing strategy in the public bond markets has been driven by the notion that the dominance of Schuldscheine - semi-tradable instruments which German mortgage banks (Hypothekenbanks) lend to German federal states as collateral for part of their bond issuance (Pfandbriefe) - is under threat.

* Bank Austria AG Guarantor: City of Vienna

THE REPUBLIC of South Africa was the beneficiary of further positive credit news this week with the news that Standard & Poor's (S&P) has made the long awaited move to upgrade the sovereign to investment grade. S&P brought months of speculation to an end last Friday (February 25) when it said that it had raised its long term foreign currency rating of the country from BB+ to BBB-.

ROYAL BANK of Scotland's long awaited £1.4bn equivalent three tranche tier 1 capital offering lived up to expectations this week when, at the time of pricing yesterday (Thursday), the issue was 2-1/2 times oversubscribed. Launched to support the Scottish bank's recent takeover of UK clearing bank NatWest, the deal is the largest ever tier 1 financing.

* Allianz Finance BV Guarantor: Allianz AG

THE HONG KONG internet and technology stock bandwagon gathered yet more momentum this week, ignoring the volatility on the international traditional stock markets and responding to more record highs on Nasdaq. Shares in Tom.com surged more than 400% on their March 1 debut. Huge demand from retail investors in Hong Kong is underpinning international institutional demand and should provide the platform for more stunning debuts from several other stocks due to list in Hong Kong and overseas, including HK.com, SUNeVision and Sunday Communications.

LEADING Polish telecoms provider Telekomunikacja Polska SA (TPSA) this week confirmed the strength of the investor bid for central and eastern European assets with the launch of a Eu475m seven year euro offering via Deutsche Bank and Salomon Smith Barney. Originally targeted at an issue size of Eu300m, the chance to gain exposure to both the emerging European telecoms sector and Poland - widely regarded as the region's core EU accession play - led to the issue being twice oversubscribed at its Eu475m launch size.

The £215m Private Finance Initiative (PFI) project for the development of the Colchester Garrison is set to be financed through the bond markets, say bankers familiar with the deal. The Ministry of Defence (MoD), which will award the concession, has selected MPA Services Limited as preferred bidder for the project on the basis of a 35 year concession period.

THE UNITED Mexican States proved to be the star turn in this week's Latin American new issue show, with its Eu1bn 10 year euro bond proving a smash hit with investors around the globe. Allocated and priced within 24 hours of being mandated to Credit Suisse First Boston and Salomon Smith Barney on Tuesday, the transaction was upped from Eu750m at launch on Wednesday on the back of orders totalling Eu1.8bn.

* Bank Nederlandse Gemeenten - BNG Rating: Aaa/AAA/AAA

* CAM Global Finance Guarantor: Caja de Ahorros del Mediterraneo

US dollar swaps traded in an unusually narrow range this week, not topping 105bp at 10 years and not breaking 100bp on the downside. Prices closed at the tight end of these levels, with 10 year swaps at 101bp and five year swaps at 72bp. There was some offer side pressure - led, say dealers, by Goldman Sachs - at 30 years towards the end of the week. Spreads came in to about 117bp on Thursday from a previous close of 121bp.