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* Bancaja International Finance Guarantor: Caja de Ahorros de Valencia Castellón y Alicante (Bancaja)

SITA Telecommunications Holdings, the world's largest operator of data communications networks, has confirmed its intention to seek a stockmarket flotation before the summer. The Netherlands-based company, to be known as Equant, is planning a dual listing in New York and Amsterdam in a deal that will value the firm at around $3bn.

Leveraged buy-outs (LBOs) have become one of the hottest areas of European investment banking, fuelled by the availability of increasingly varied and cost effective forms of financing. Banks have been rushing to put acquisition finance teams in place, attracted by the high returns on offer. Institutional investors, particularly from the US, are creating a new capital pool for senior debt financing. High yield bonds are starting to take off in Europe. Mezzanine is still plentiful. And the supply of private equity and venture capital is at an all-time high. Some financiers already fear that the LBO market may be overheating. At a time when asset prices are so high, and the competition for deals so intense, they believe that the market risks a repetition of its collapse in the early 1990s unless the currently hectic pace of activity slows down. But others say things are different this time -- that the economic outlook in Europe is much better than in the late 1980s; that lenders and investors are much more selective about the deals they will do, and how they structure them; that the development of new and more sophisticated forms of financing has fundamentally changed the dynamics of the LBO market; and that the long term prospects are bright. It is too early to tell who is right. But, one way or another, it is going to be an exciting ride in the leveraged finance market. Charles Olivier reports.

INTERNATIONAL investors are pouring into economically sensitive sectors such as construction, steel and raw materials, spurred by a succession of positive economic results throughout the EU. In the next few months several companies from these sectors will come to the market, either looking to raise capital or as vendors seeking to divest out of their holdings at the currently favourable prices.

GOLDMAN Sachs has closed the sub-underwriting phase on one of the most successful syndications this year in the Euroloan market. Banks committed $5.75bn to the $2.6bn credit facility backing Bacardi's purchase of Dewar's Scotch Whisky and Bombay Gin from Diageo. The blow-out transaction showed the depth of demand for the right name in the syndicated loan market, triumphing despite early criticism that the pricing, which ranges between 25bp and 45bp over Libor, was too tight for an acquisition related facility arranged for a Bermuda based company. The deal was also launched at a time when a number of UK acquisition related deals were struggling in syndication due to poorly perceived deal structures seen as over-leveraged, or in sectors that were vulnerable to economic downturn.

* Bank Nederlandse Gemeenten Rating: Aaa/AAA/AAA Amount: Dra10bn

HSBC WAS appointed lead manager in the sale of stock in Powszechny Bank Kredytowy (PBK) this week. There had been strong competition among international investment banks for the mandate, with the deal likely to raise around $250m. The sale will be one of the first capital increases for a recently privatised bank. HSBC has been working with the bank for some time. It had been due to lead the privatisation of PBK through a public flotation last year, but the Polish authorities shelved plans for a public offer in favour of a strategic sale and a placement which raised $300m.

THE ITALIAN treasury successfully concluded the sale of its national airline this week with the $450m offering of shares in Alitalia. The shares, already traded in Milan in a fairly illiquid float, were sold by Iri, the Italian state holding company which set an issue price of Lit28,500. Although the deal attracted strong levels of interest from local and international institutional investors, one of the concerns during the marketing period was the high trading price of the outstanding shares.

Asset backed securities: * Celtic Residential Irish Mortgage Securitisation No 1 plc

* World Bank Rating: Aaa/AAA

THE REPUBLIC of Italy demonstrated the pent-up demand for European sovereigns in the dollar sector this week when it launched a $2bn 10 year Eurobond at the best sub-Libor rates that it has ever achieved in the international markets. Italy was able to take advantage of the lack of competing EU sovereign supply as well as arbitrage in the dollar market to generate sub-Libor funding of minus 19bp -- below even what it can achieve in domestic BTPs.