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EURO SWAP spreads against cash tightened this week. Ten year spreads against Bunds came in to 35bp bid and to 28bp over OATs, while swap rates were generally firmer in line with weakness in underlying bond markets. Dealers are trading on the belief that spreads to cash will tighten yet further. These conditions do not suggest ideal conditions for borrowers wishing to issue debt and swap out of fixed euros and therefore at the end of the week, the pipeline was looking fairly thin.

BRITISH AMERICAN Tobacco launched the largest single tranche euro corporate bond this week in a vivid illustration of the opportunities opening up for corporate borrowers in Europe's single currency market.

THE BATTLE for new equity capital markets business between international and local investment banks in Germany is becoming increasingly intense. This week Veba, one of Germany's largest industrial groups, announced that it had appointed Dresdner Kleinwort Benson and Warburg Dillon Read to act as joint global co-ordinators for the flotation of Stinnes, one of the world's foremost groups in the field of haulage and logistics. ABN Amro Rothschild is advising Veba on its plans to list Stinnes' shares. The process will begin at the start of the second quarter when marketing to local and international investors should start.