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The Japanese securitisation market has offered little but disappointment to foreign deal engineers this year. While 1998 was a boom year for international issuance and Japan promised even greater rewards in 1999, the reality has been very different.

Activity in Japan's long dormant Samurai domestic bond sector is starting to liven up again. Domestic investors are increasingly keen to find alternative investments at a time of paltry returns on traditional products and are increasingly willing to move down the credit scale.

Almost all the predictions made last year for Japan's domestic corporate bond market in 1999 have been stood on their head. Last year, as the credit crunch worsened, as investors shied away from credit risk and as corporate bond spreads rose steadily, bankers in Tokyo were predicting another boom year for a market which had almost doubled in size from 1997.

Weather derivatives markets have traditionally been characterized as having a small number of participants and large bid-ask spreads, but this is rapidly changing.

The list of actual contracts in use is extensive and constantly evolving.

Japan's largest consumer finance company, Nippon Shinpan Co, issued its third securitisation of shopping loans this week with a ¥20bn deal privately placed by Greenwich NatWest - the first time the UK/US house has lead managed a securitisation of Japanese domestic assets. Nippon Shinpan has been a pioneer of structured finance in Japan - its ¥15bn J-Cars Corp deal, backed by auto loans and lead managed by Goldman Sachs, effectively opened the term ABS market in 1994.

Korea Tobacco & Ginseng's $790m privatisation became the latest deal to fall prey to investor apathy toward Asia when bookrunners Credit Suisse First Boston, Dongwon Securities Hyundai Securities and Warburg Dillon Read were forced to pull the deal just one day from pricing, due today (Friday). Continuing investor resistance to Asian stocks, combined with funds shutting their books in advance of potential Y2K problems, means the year will end on a low note.

Warburg Dillon Read completed the A$280m privatisation of Queensland TAB with the stock trading up during the week despite being sold at the top of the indicated range. The retail component of 105.3m share sale dwarfed the 32.7m share institutional tranche but retail investors still drove much of the rise in the aftermarket.

Hong Kong BOCI was bookrunner on the $135.1m IPO of TCL International Holdings. The company designs, manufactures and sells electronic products.

Japan continued to host a spate of international equity offers with the completion of Fancl's ¥88.78bn deal ($845m) and the launch of Ryohin Keikaku's ¥95.7bn ($912m) global secondary offering. The Nomura-led deal for cosmetic, medicine and health food company Fancl was 10 times covered, including the Japanese tranche, while the international tranche was four times covered.

The Islamic Republic of Pakistan launched its long expected Eurobond exchange this week, with market observers uncertain whether the terms are acceptable enough to make the potential $623m transaction viable. Driven by the Paris Club's enforced comparability treatment of all creditors, the exchange marks a key turning point in the way that future sovereign debt restructurings will be handled as well as a shift in the precedence accorded to Eurobond holders over other creditors. However, with bondholders conscious of the fact that the country did not want to initiate an exchange, some experts have argued that investors may decide to gamble on a government showdown with the Paris Club over the repayment of a $150m Eurobond which falls due on December 22.