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DePfa took its latest step away from the traditions of the Pfandbrief market this week when, through nimble swap operations that ensured Euribor minus funding, the mortgage bank priced its Eu3.5bn global superjumbo at an intended 52bp over Bunds - despite a 2bp to 3bp swap spread tightening between launch and pricing. German mortgage banks have always been among the most sensitive borrowers to any move in swap spreads and subsequent changes in the funding levels they can achieve. Such an arbitrage driven approach has in the past given jumbo issuers the reputation of being aggressive borrowers, as they have sought to ensure the finest possible pricing.

Renewed dollar buying by Asian accounts, first seen in last week's transactions for the World Bank, Denmark and KfW, encouraged further Eurodollar issuance this week. Significant among the Eurodollar deals was a $1bn five year transaction for the Republic of Portugal. The EU sovereign has been absent from the dollar sector since 1993 but, although offering considerable rarity value, the pricing was considered tight at 73bp over Treasuries.

Although new issue momentum has yet to pick up properly on Wall Street after the Labor Day holiday, more names were added this week to an already impressive pipeline and market conditions are looking good for a busy second half of September. Although the frenzy for internet stocks may have cooled recently, there are no shortage of companies coming to the market from the sector. Deutsche Banc Alex Brown is at the helm for the revived IPO from Luminant Worldwide, which filed new terms this week.

National Westminster Bank will embark on the broadest ever bank capital raising exercise in the global debt markets in the coming weeks as part of its £10.75bn takeover of UK life insurance and pensions group Legal&General.

National Westminster Bank will embark on the broadest ever bank capital raising exercise in the global debt markets in the coming weeks as part of its £10.75bn takeover of UK life insurance and pensions group Legal&General.

The Eurodollar market saw a wave of issuance in the early part of the week, while swap spreads gradually tightened. Although swaps remain close to all-time highs, secondary corporate spreads are trading wider still. This means that arbitrage is extremely elusive, and getting even harder to find. In fact, borrowers are often having to accept funding at levels less attractive than those to which they are accustomed, while others determine that current market conditions are simply too hostile (see box below).

While swap spreads have traded at historic highs in recent weeks, the market has largely maintained these prices, rather than bidding them down as soon as a temporary panic passed. Nonetheless, borrowers are still finding it difficult to hit funding targets in both euros and dollars. For example, US financial services company Household Finance issued a Eu500m five year deal via ABN Amro and Deutsche, which was swapped back to floating dollars, a Household spokesman confirmed.

DePfa took its latest step away from the traditions of the Pfandbrief market this week when, through nimble swap operations that ensured Euribor minus funding, the mortgage bank priced its Eu3.5bn global superjumbo at an intended 52bp over Bunds - despite a 2bp to 3bp swap spread tightening between launch and pricing. German mortgage banks have always been among the most sensitive borrowers to any move in swap spreads and subsequent changes in the funding levels they can achieve. Such an arbitrage driven approach has in the past given jumbo issuers the reputation of being aggressive borrowers, as they have sought to ensure the finest possible pricing.

Building society turned bank Northern Rock Plc raised £600m from its first issue of mortgage backed securities this week, and lent new credibility to hopes that securitisation could at last be entering the mainstream of UK bank finance. The UK has produced a regular stream of mortgage securitisations since the late 1980s, but most of the deals have always come from new entrants to the market, including, in the last few years, sub-prime lenders.

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