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Moody's aligned itself with Standard & Poor's (S&P) and Fitch this week, when it announced plans to change the way it rates preferred stock. Unlike the other rating agencies, which rate preferred stock and bonds on the same scale, Moody's has used a different rating scale for prefs - arguing that there are "fundamental differences between preferred stock and bonds".

* European Investment Bank Rating: Aaa/AAA

* BES Finance Ltd Guarantor: Banco Espirito Santo SA

Domestic issuance: * Pfandbriefzentrale der Schweizerischen Kantonalbanken

Sceptics insist that credit derivatives and synthetic securitisation are a flash in the pan. But most of the evidence suggests these techniques are so powerful and versatile that they will play a vital role in the new world of grown-up risk management.

The credit derivatives market and its alter ego, synthetic securitisation, have grown exponentially in the last few years as banks have spotted a welcome opportunity to raise their return on capital. But there is still a long way to go before unfunded credit risk is a truly liquid commodity.

Synthetic securitisation came like the answer to a prayer for many big banks, offering the prospect of transferring almost unlimited quantities of low yielding corporate loans with unprecedented efficiency.

In mid-November Dan Wilchins, managing editor of Derivatives Week, spent a day on the credit derivative trading desk at Chase in New York.

Hypo Tirol Bank (Hypo Tirol) signed a euro2 billion ($1.72 billion) debt issuance programme on Thursday 30 November. It is the third signing this year from an Austrian bank, following Bawag, which signed its euro3 billion Euro-MTN in June and Oberosterreichische Landesbank which signed its euro1 billion debt issuance programme in July. Deutsche Bank has scooped the arrangership and the mandate confirms Deutsche Bank's position at the top of the arrangership league table (see page 22). Deutsche Bank has arranged 21 programmes this year, including one for ENV, another Austrian issuer. The tally puts the bank seven programmes ahead of Merrill Lynch which held the top spot for 1998 and 1999. Hypo Tirol is one of eight Austrian Landesbanks and has a balance sheet of euro4.85 billion, as of December 1999. The issuer is rated AA+ by Standard & Poors. The dealers on the dealer panel are the arranger, Commerzbank, Credit Suisse First Boston, DG Bank, Erste Bank der Osterreichischen Sparkassen, HypoVereinsbank, JP Morgan and Merrill Lynch.

Enel will sign its euro3 billion ($2.53 billion) global MTN programme next week, if all goes to plan. Deutsche Bank and JP Morgan are the arrangers. The dealer panel comprises ABN Amro, Barclays Capital, BNP Paribas, Lehman Brothers, Mediobanca, Merrill Lynch, Salomon Smith Barney and UBS Warburg. It is the third Italian utility to join the market in the past year, after Eni signed its Euro-MTN programme in November 1999 and Edison, the electricity producer, signed its facility last July. And it has been a good year for utilities, with 12 signings already and Enel raising this number to 13. The number has already surpassed the 11 programmes signed by utilities in 1999. Enel is the world's largest publicly listed electric utility with 29 million customers. Standard & Poor's has assigned its programme an A+ rating. The Italian utility, which once had a monopoly on generating electricity in Italy, is now ensuring its place in the energy market by buying gas and water operations.

Another triple-A Austrian borrower is to come to the market when Vorarlberger Landes- und Hypotekenbank (Vorarlberger) signs its euro1 billion ($1.06 billion) Euro-MTN programme on September 20. It joins the Republic of Austria, PSK and Oesterreichische Kontrollbank in the elite group of triple-A Austrian issuers but will distinguish itself by soley issuing in the private market. Dr Hannes Leitgeb is the treasurer at Vorarlberger. He says: "Despite our triple-A rating we are a small bank and have no need to go to the public markets. We will be an opporunistic issuer." The first issue will come shortly after the signing and is likely to be about $25 million and possibly denominated in yen. Vorarlberger has issued bonds in the four-to-six year sector in the international capital markets, but only ever in Swiss francs. Leitgeb says: "Though most of our issuance will be in euros I look forward to issuing in dollars and definitely yen at some stage." Vorarlberger is also open to structured trades. Leitgeb says: "If Austrian banking regulators were not so strict Vorarlberger would definitely be open to issuing the fanciest stuff." Credit-linked notes are ruled out but Leitgeb says equity-linked and index-linked will certainly be entertained. The borrower, which funds itself at Libor minus seven in the domestic pfandbrief market, hopes to achieve even tighter levels in the private MTN market. Leitgeb says: "It is hoped we can issue in the deep minus 10 region." The arrangership mandate has been won by Deutshe bank, which has now bought three of the four Austrian borrowers to come to market this year. Also, it is rumoured that Deutsche is arranging the first ever Austrian utility later in September. The dealer group comprises Banca del Gottardo, Credit Suisse First Boston, Dresdner Bank, Goldman Sachs, JP Morgan, Landesbank Baden-Wurttemberg, Merrill Lynch, Salomon Smith Barney, Warburg Dillon Read and the arranger.