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Fitch IBCA has downgraded several western banks due to concerns about their exposure to the Russian crisis. Others have been put on review with a negative outlook. Landesbank Rheinland-Pfalz's individual rating which assesses how the bank would be viewed if it were independent and could not rely on external support, has been downgraded from B/C to C in light of the bank's exposure to Russia and its low capital base. However, its triple-A long term rating was confirmed at AAA thanks to the state guarantee mechanism.

Morgan Stanley Dean Witter is poised to kick start Korea's stalled privatisation process with a sale of Korea Telecom shares that could raise around $600m. The move comes almost a year after a collapse of confidence in Korea stalled KT's last attempt at a global IPO. Both the company and the government are keen to complete the sale before the end of October and bankers said a research blackout will begin next Thursday, while filing with the SEC should be on September 27. Rival bankers said the sale might struggle in the face of continued market volatility.

Morgan Stanley Dean Witter has won the advisory mandate for the planned sale of Bangkok Metropolitan Bank and Siam City Bank, nationalised earlier this year, as the consolidation of the Thai banking sector continues apace. The factor which clinched the advisory role in the face of competition from Goldman Sachs, JP Morgan and Merrill Lynch was reportedly Morgan Stanley's willingness to cut its fee in the event of falling short on its promises.

* Samsung Electronics said this week that it will halve the size of its planned jumbo domestic bond issues following government pressure on the back of mounting yields. What would have been the largest single corporate bond deal in Korea's history has now been halved to Won500m ($360m) and will be launched three days later than scheduled on September 25.

The Asian Development Bank (ADB) established a new bridgehead for foreign borrowers in the Australian domestic market this week with its debut A$1bn transaction. Although bankers do not believe that the deal will presage a tidal wave of Kangaroo issues, all agreed that it had laid the successful foundations for what could become an important future market sector, should investors continue to seek triple-A rated proxies for dwindling sovereign and semi-sovereign supply.

Asia's only internationalised and thriving domestic debt market stands in danger of being brought to its knees following moves by the Hong Kong Monetary Authority (HKMA) to close speculative loopholes. Hong Kong debt market players were incensed by the government's latest action to stem pressure on the currency's peg to the US dollar by virtually closing down the Hong Kong dollar bond market.

The US retail preferred market witnessed a mini-onslaught from Australian banks this week with the launch of competing transactions by ANZ and National Australia Bank (NAB). Both banks used a proprietary structure designed by Merrill Lynch known as TrUEPrS (Trust Units Exchangeable for Preferred Shares) to improve their tier 1 ratios with transactions which partially mimic debt but count as equity for tax and regulatory purposes.

Market report Compiled by Glenn Blackley, RBC DS Global Markets, London.

LANDESBANK Kiel and WestLB have had to reduce the $150m multicurrency term loan facility for Bolig-og-Naeringsbanken (BN Banken) to $100m. The arrangers blamed the volatile market conditions for the cut in size. However bankers suggest that appetite for Norwegian debt has waned due to the enormous amount of debt required by Norwegian borrowers over the past nine months and particularly since June.

A renewed wave of volatility threatened to sweep through the financial markets in eastern Europe as a result of growing investor concerns over the measures proposed by Russia to alleviate its economic predicament. Western banks yesterday (Thursday) urged the Russian government to rethink the terms of a debt workout scheme where domestic investors would receive preferential treatment over international investors, which hold an estimated $15bn-$17bn of GKOs.

Denmark ABN Amro, Citibank and Bank of Tokyo-Mitsubishi have closed the co-arranging phase of the $500m credit for Borealis, the Danish petrochemicals company.

Market commentary Compiled by Tawanda Nyandoro, RBC DS Global Markets, London. Tel: +44 171-653 4870