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NATIONAL GRID's shareholders this week seemed to be swinging in favour of the company's plan to issue £300m to £500m of convertible bonds in an attempt to optimise its capital structure. The scheme, which was designed by HSBC and announced last week, was greeted coolly by a minority of the 40 largest National Grid shareholders. But the company says it will allow it to cut its tax liability, increase gearing and minimise dilution of its equity. Several other UK companies have indicated that they may restructure their capital in similar ways.

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Market report Compiled by Gerard Perrignon, Hambros Bank Ltd, London. Tel: +44 171-865 1759

MERRILL LYNCH this week sold the first multi-currency issue of cumulative perpetual preference shares for a European corporate, raising $360m for Italian food group Parmalat. Although the notes were targeted at debt investors, they will be treated as equity for balance sheet purposes and offer Parmalat an ideal funding source as it ventures into emerging markets.

BOTSWANA'S first ever bond -- a Pula50m ($13.5m) seven year issue for Botswana Development Corporation -- received an enthusiastic reception from domestic investors this week, closing nearly 50% oversubscribed. Priced to yield 14% semi-annually, the transaction offered a 220bp pick-up over 12 month Bank of Botswana certificates yielding 11.80% on an equivalent basis.

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GENERAL uncertainty in the loans market, twinned with the inevitable slowdown as year-end approaches, claimed a casualty this week in central Europe which is unlikely to be the last of its kind this year. Joint arrangers Bayerische Landesbank and Crédit Lyonnais announced that they were delaying a planned DM300m international syndicated credit facility for the Czech mobile telecoms company, RadioMobil as.

RUSSIA is lining up commercial and investment banks to provide a bridge financing of around $2bn to plug its widening budget gap. News of the facility -- likely to have a 12 month maturity and to be in either loan or FRN form -- comes as evidence mounted this week that Russia is facing a domestic liquidity squeeze.

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THE LONG AWAITED shake up in Swiss banking may begin as early as today (Friday) with SBC Warburg Dillon Read and UBS poised to announce an agreement that could extend to a full blooded merger.

SARDINIA this week became the first of what is expected to become a growing number of Italian regions and municipalities to launch a public Eurobond -- but most bankers involved in the deal said that the new asset class had made an inauspicious start. The $460m 10 year deal, on which Chase Manhattan was bookrunner and Crediop and Mediocredito Centrale were joint leads, was criticised by syndicate members as being too tight and for incorporating an amortising structure which limited the investor base.