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Market commentary: Compiled by Jim Webber, TD Securities, London.Tel: +44 171 282 8216

INTERNATIONAL investors are diversifying away from Asia and Latin America and putting their money into central Europe in search of growth opportunities. This was the clear view being expressed this week by equity capital markets professionals looking at the response to the first deals of the year from the region and a potentially interesting calendar of new issues over the next few months.

THE CENTRAL and eastern European euro express looks set to accelerate further with the news this week that the Republic of Slovenia has become the latest sovereign from the region to ask banks to bid for the lead management role on an issue denominated in the single European currency. A3/A rated Slovenia, central and eastern Europe's top rated credit, is understood to have asked for proposals on a probable Eu400m 10 year transaction. This is expected to be the sole international bond offering from the highly regarded country -- a fast track candidate for EU membership early in the millennium.

KEY BANK this week brought an $865m securitisation of US student loans in three floating rate tranches, lead managed by Credit Suisse First Boston. KeyCorp Student Loan Trust 1999-A was warmly received by a market that has been kept hungry for ABS since the start of January.

JP MORGAN will likely finish marketing its $2bn to $2.5bn CLO, 23 Wall Street Commercial Loan Trust, in the next two weeks. JP Morgan officials declined to comment, but market participants said the transaction is backed by revolving loan facilities from the balance sheet of Morgan Guaranty Trust. The deal will introduce a new structure to the public ABS markets -- the variable funding note.

FRENCH non-bank finance company Comptoir des Entrepreneurs brought a Eu380m issue from its Vauban Mobilisations Garanties bankruptcy remote mortgage funding vehicle this week, lead managed by CDC Marchés and Dresdner Kleinwort Benson. VMG is a special purpose company that provides CdE with flexible access to the capital markets under a AAA rating from Standard & Poor's. CdE transfers mortgages into fonds communs de créances (French securitisation vehicles), which issue senior and junior units.

* Greenwich NatWest is marketing a Eu229m securitisation of apartment block rents for Compagnie Vauban, a French property company owned by Vauban SA of Belgium. The firm is unconnected with Comptoir des Entrepreneurs' funding vehicle Vauban Mobilisations Garanties.

NHP, the UK company that finances operators of homes for the elderly, will today (Friday) launch a £265m securitisation of its rental incomes, lead managed by Merrill Lynch and JP Morgan. The UK government is increasingly using private sector nursing homes to provide care for old people who can no longer look after themselves. Several companies have begun to offer finance for the operators of such homes through sale and leaseback agreements, financed by securitisation.

HYPOVEREINSBANK's Eu2.22bn collateralised loan obligation Geldilux 99-1 marked a new departure for the asset class this week, combining structural advances made by a number of previous issuers with some novel features. Geldilux is most closely comparable to Credit Suisse First Boston's $2.5bn Triangle 2 transaction, launched last September. Triangle 2 is delinked from CSFB's rating, since bond proceeds never reach the bank's balance sheet, but are held in the issuing vehicle and invested in US Treasuries.

A fundamental intuition provided by the Black-Scholes model is the principal of no arbitrage and the use of risk-neutral valuation for pricing derivative instruments.

THE ASIAN Development Bank kicked off its 1999 funding programme in style this week with the launch of an NT$10bn ($310m) three tranche bond deal, the largest ever issue by a non-Taiwanese entity in the domestic bond market. The issue is first time that the ADB has returned to Taiwan since December 1996, and also marked the first from the island republic since the government suspended supranational issuance early last July for fear of speculative pressure against the currency through the swap market.

THE SPATE of first quarter securitisations from Japanese equipment leasing and consumer finance companies began in earnest last Friday, and continued this week. Squeezed by Japanese banks' unwillingness to lend, non-bank finance companies with healthy assets are eager to raise capital from new investors before the fiscal year end on March 31.