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Market commentary Compiled by Gerard Perrignon, RBC DS Global Markets, London. Tel: +44 171-865 1759

A EUROPEAN Commission draft directive to impose a minimum 20% withholding tax on cross border interest payments, was this week blasted by bankers as outrageous, disruptive and having serious repercussions for the Eurobond market. Under the planned directive, EU member states would have to either levy the tax themselves or provide information to other member states on interest income from savings, including Eurobonds, of EU citizens.

THE REPUBLIC of Kazakhstan has appointed JP Morgan to lead manage the country's debut euro denominated bond offering, likely to be just one of a growing number of Euromarket transactions from the well regarded Central Asian state in the coming months. This is the first time that JP Morgan has been awarded the sole bookrunner's role on a euro issue.

GOLDMAN SACHS is gearing up for the June launch of one of the most important sales to emerge from the Turkish market -- the international offering of stock in conglomerate Koç. The largely primary offering, set to be concluded in July, will consist of ordinary shares and GDRs and looks set to encompass a capital raising of between $200m and $300m. Goldman has held the books on the Koç sale since last year and the transaction has been eagerly awaited by investors for some time. The group is one of the largest of the country's conglomerates and has activities in an array of activities.

THE TURMOIL spilling over from Asia forced Mexican oil concern Pemex to join the rest of Latin America's would-be bond issuers on the sidelines by postponing its planned £150m 15 year deal this week. Underwriter SBC Warburg Dillon Read hopes to launch the deal in one form or another in the week ahead as long as stability returns to the market. The bank was awarded the mandate two days before Indonesia's turmoil sparked another wave of selling in the emerging markets.

LANDSVIRKJUN, has signed a $500m Euro-MTN programme, the first by an Icelandic issuer. Merrill Lynch has arranged the programme. Landsvirkjun, the National Icelandic Power Corp, has been borrowing internationally for 30 years. It has issues outstanding in both the bank and international capital markets.

THE FIRST National Building Society has launched a I£200m mortgage backed security, in just the third bond market deal of its type to emerge from Ireland. Asset-backed bankers said the issue showed that securitisation was gradually creeping on to the financing agenda in Ireland, although relatively small asset pools and high liquidity among most lenders would continue to limit its use. Launched by SBC Warburg Dillon Read and UBS, the issue parcelled up just under 5,700 home loans via special purpose vehicle Celtic Residential Irish Mortgage Securitisation. The bonds were divided into two tranches: a I£190m senior tranche provisionally rated Aaa by Moody's and paying a discounted margin of 22bp over Dibor; and a I£10m junior tranche rated A3 and paying 62.5bp over.

* CSFB brought a rare Caribbean securitisation last Friday, with a $110m deal for Phoenix Park Gas Processors of Trinidad. Phoenix Park Funding, rated Baa3/BBB, is backed by exports of gas products from the company's fractionation plant to customers in the Caribbean, Central America and the US. All revenues will be paid to an account in New York in favour of the Cayman Islands SPV.

RBC DOMINION Securities launched the second deal last Friday from Haven Funding 32 plc, the club borrowing vehicle for UK housing associations set up by Hambros Bank. Haven 32 issued £21.6m of bonds fungible with the inaugural £60.75m deal launched in January. The issue raises funds for Focus Housing Association and Chiltern Housing Association, which are both new to the Haven programme.

What information about a counterparty's default probability is determined by their stock price?

PROSPECTIVE bond issues by Pakistan and Sri Lanka have been thrown into doubt by the reverberations of India's decision to test-detonate five nuclear devices. International sanctions announced against India may also put on hold transactions from the country. The primary casualty looks set to be a new benchmark offering by the Islamic Republic of Pakistan, to led by ANZ. Due diligence had already begun on the $300m five year fixed rate offering which was scheduled to be launched next month.