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PRIMARY market activity in Germany accelerated this week with news of two large rights issues from Volkswagen and Commerzbank. The German car maker is to raise DM6bn-DM8bn ($3.15bn-$4.2bn) in a capital increase that will be lead managed by Deutsche Morgan Grenfell, while Germany's third largest bank is to raise DM1.5bn ($830m) to bolster its investment banking operations.

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Crédit Lyonnais is expected to announce its long-awaited mandate for the second Cyber-Val securitisation today (Friday). Among firms in the running for the prized lead role among domestic banks are said to be Société Générale, CDC Marchés and BNP. Merrill Lynch is expected to have a key role. The bank has delayed choosing lead managers in the hope of a decision from the German authorities on a risk weighting for the transaction, since this will affect distribution in Germany.

TWO landmark asset backed transactions both took the CLO structure in new directions this week, giving a foretaste of the bold and innovative deals to come in this market. SBC Glacier Finance Series 1997-1 and 1997-2 securitised credit-linked notes issued by Swiss Bank Corp's New York branch in a $1.74bn transaction divided into two equal halves, at five and seven years. Each consisted of $798.225m of senior bonds rated Aa1/AA+, and a privately placed $71.775m subordinated tranche.

TOYOTA Motor Credit Corp's first securitisation of auto leases was hailed as a triumph by bankers as extensive roadshows in three continents contributed to heavy demand and larger sales in Europe and Asia than in the US. Global co-ordinator Merrill Lynch ran the books in North America, Morgan Stanley covered Europe and Lehman Brothers concentrated on Asia.

INDIA'S already ambitious privatisation programme was further expanded this week with a $600m issue for the Indian Oil Corporation (IOC) brought to the front of the queue and invitations sent out for a government sell-down in the Ministry of Railway's subsidiary Concor. Market expectations that either a $800m stock offering in domestic telecom operator Mahanagar Telephone Nigam (MTNL) or a $600m offering by the Gas Authority of India (Gail) would lead the next wave of sell-downs were negated by the news that the government had decided on an oil price hike to cover the republic's $5bn oil pool deficit.

THE KOREA Development Bank (KDB) has spent the week walking a tightrope, with investors wary of adding to already huge losses on Korean bond issues as KDB prepares to launch an expected $1bn global bond. Bankers commented that the A1/AA- rated bank has been trapped by its unenviable task of re-establishing a new benchmark for Korean spreads ahead of expected sovereign ratings announcements by both Moody's and Standard & Poor's.

THE wave of innovative equity related transactions from Taiwan is gathering pace with groundbreaking deals due over the next month from First International Computers (FIC) and Advanced Semi-conductor Engineering (ASE). Bankers said that ASE is likely to come first with a $200m FRN structured via a Labuan-based SPV. Mandated to SBC Warburg Dillon Read, the fully asset swapped deal follows similar issues from Malaysia but marks a first for Taiwan.

THE MARKET for Philippines debt looks set to be tested by a new bond issue from one of the country's leading blue chips. San Miguel Corporation, one of the Philippines' most highly regarded and internationally diversified companies, is believed to have switched plans for a syndicated loan to the launch of a new FRN instead.

THE Islamic Republic of Pakistan set an important landmark this week with the successful pricing of a first investment grade bond issue from the country. Led by ABN AMRO and Citicorp, a $225m securitised transaction by majority state owned Pakistan Telecommunications (Paktel) scored a number of firsts, not least in being the first securitisation from the country and the first telecoms transaction backed by multiple carriers.

* Standard & Poor's has downgraded the foreign currency rating ceiling of the Kingdom of Thailand to A- from A. S&P first placed the country on CreditWatch at the beginning of August, but the expected revision has long been factored into ever widening spreads, with the kingdom's 7.75% 2007 Yankee trading at double its 90bp launch spread in April. S&P had previously criticised Thailand's weak coalition government for being slow to recognise and manage escalating problems. In a statement the agency said that: "Thailand's weakened growth prospects, the still sizeable recapitalisation needs of the financial system and the expected run-up in public external debt have weakened the government's financial profile to a degree no longer consistent with the kingdom's previous levels."

DETAILS of the new benchmark transaction from the People's Republic of China have become increasingly fuzzy. A growing body of opinion is questioning why the government should want to press ahead with the deal in the face of the current market environment. "They don't need the money, so why are they going ahead with what is primarily a public relations exercise when they stand to get far better spreads later in the year?" one banker argued.