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Capital markets wake up to insurance risk A year ago a Californian earthquake bond seemed exotic. Now for a small group of fixed-income investors it's old hat -- they want new risks. Bond and derivative investors are slowly but inexorably applying their vast resources to insurance risk, and investment bankers argue the scope is limitless.

THE FRENCH government is proceeding undaunted with a heavy sale schedule, which includes the second tranche of its privatisation of France Télécom, the flotation of insurance group, Caisse Nationale de Prévoyance (CNP) and the sale of shares in Crédit Lyonnais. Although the government remains characteristically tight-lipped about its intentions, bookrunner ABN Amro Rothschild is expected to launch the sale of CNP in the next week with a view to pricing the deal just after the execution of the Swiss government's sale of shares in Swisscom.

BRAZILIAN conglomerate CSN closed a $285m one year credit-enhanced commercial paper issue this week, in a deal which has left other Brazilian corporates abashed. The deal, arranged by Bank America, was increased from an original $150m after being oversubscribed by 90%. However, CSN was lucky in its timing -- Bank America launched the deal in the first week of July, before the latest emerging market crisis hit its peak.

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Croatia Banque Nationale de Paris, Bank Austria Creditanstalt and Dresdner Bank Luxembourg have closed general syndication of the DM70m three year revolving credit for HBOR.

BANCO Santander will next week launch the sale of stock in Spain's leading brewer and wine-maker, Bodegas Paternina, in a key test of the Spanish market's receptiveness to new issues. The deal will be the first to emerge since the recent global market turmoil erupted and its fate may set the stage for the many other deals in the wings.

Dale Somerville has joined Paribas' loan syndications team in Paris. Somerville joins from Crédit Lyonnais's Paris loans team and will cover French multinationals and local authorities, Emmanual Bresson has also been hired for the Paribas loans team. Bresson will cover project finance and media and joins from Bank of Tokyo-Mitsubishi in Paris.

WHILE INSURANCE securities issued as bonds have enjoyed the limelight, a market in derivative structures offering exposure to insurance risk is quietly flourishing in the shadows. At the end of June, Paribas and AXA arranged a catastrophe option to provide reinsurance against a Californian earthquake for an undisclosed US insurance company.

ARRANGERS of the £700m facility for Railtrack -- Barclays, Deutsche, HSBC and JP Morgan -- have priced the transaction, Euroweek can exclusively reveal. The loan carries a margin of 45bp, stepping up to 55bp. However, the four banks are unlikely to launch the financing until October.