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This is the third of three articles regarding a heuristic approach to measuring counterparty credit risk. In the first part, author Robert Garzotto explained the approach broadly.

TELSTRA has added a step-up coupon protecting investors against future downgrades in an attempt to attract buyers to its Eu1bn 10 year bond issue, lead managed by BNP Paribas and Deutsche Bank, which will be launched around June 5. The added feature emerged from the Australian telecommunications giant's European roadshows which ran for a fortnight earlier in the month. It is the company's reaction to a widening of spreads on its existing bonds after a costly series of rating actions.

IN A surprise announcement yesterday (Thursday), Vodafone Pacific postponed its planned IPO just days before a global roadshow was due to begin. But parent company Vodafone Airtouch remains committed to listing its Australian operations should the volatility in global markets decrease and if sentiment towards telecommunications stocks improves. However, the window of opportunity in the coming months will be slim as the European and US holiday season looms and as Sydney prepares for the Olympics in September.

SALOMON Smith Barney completed an unlikely block trade for Digi.com on Wednesday, raising $135m (equivalent) for undisclosed sellers. Digi.com is the third largest mobile phone operator in Malaysia and the number one prepaid mobile phone company. The unexpected block deal was executed despite the declines on Nasdaq and falling telecoms share values around the globe. Digi.com shares closed at M$8.40 on Tuesday and Salomon placed the block of 67m secondary shares at M$7.60, a discount of 9.5% on Wednesday. Some 50% of the shares went to fund managers based in Asia, 40% to European institutions and 10% to US buyers. The deal comes just one week before Malaysia is reinstated in the Morgan Stanley Capital Index for Asia (ex Japan). As of June 1, regional index funds will need to focus more attention on the Malaysian market, which was pulled from the regional MSCI following the imposition of capital controls in 1998.

Australia Merrill Lynch on Wednesday completed a primary market fund raising of A$111.75m for AXA Australia Diversified Trust, the country's 10th largest real estate investment trust.

LVMH Moët Hennessy Louis Vuitton, the French luxury goods manufacturer and retailer, has launched a S$100m one year bond via lead manager Deutsche Bank. The bond launched LVMH's Euro-MTN programme, which Deutsche arranged earlier this month. It had a reoffer price of par with a coupon of 3.55% - in line with Singapore dollar deals launched by corporates earlier this year. Overseas Union Bank was co-lead manager.

China International ratings agency Standard & Poor's (S&P) lowered its ratings on Zhuhai Highway Co's $86m senior notes due 2006 to BB- from BBB-, and its $115m subordinated notes due 2008 to B- from B+ this week, with the ratings remaining on CreditWatch.

POWER Finance Corp (PFC) of India still has not confirmed a Yankee bond mandate which attracted competitive bidding from an array of banks more than two weeks ago. Increasingly, bankers believe that the issuer, which took bids for a $150m-$200m 10 year deal from eight groups of banks, has turned away from the bond market and is preparing a loan.

KERRY Packer has succeeded in raising new money for listed company Fairfax Trust. It will soon change its name to CPH Investment Corp and become an acquisition vehicle scouring the Australian market for undervalued assets. However, the A$240m Packer has secured from mainly retail investors is more like battle rations than the A$600m warchest Packer and lead manager Merrill Lynch sought when the deal first emerged several months ago. Nevertheless, the completion in such difficult market conditions is a vote of confidence in the Packer investment touch.

SEMICONDUCTOR packaging company Siliconware Precision Industries has decided to brave the turbulent markets and proceed with its planned sale of 30m American Depositary Receipts (ADRs) to raise around $333m in fresh capital. The deal was placed on hold recently after the Asian leg of the international roadshow had begun. DLJ has emerged as joint bookrunner with Credit Suisse First Boston. Previously, DLJ was joint lead manager and CSFB sole bookrunner.

THE roadshow for the sale of American Depositary Shares (ADSs) in Taiwan Semiconductor Manufacturing Company (TSMC) began this week. The issue will be priced on June 1. Approval was obtained last week from the Taiwanese authorities. The issue will total 28m ADSs before the greenshoe and will include 23m new shares and 5m secondary shares issued by the controlling shareholders and management. There is a 15% greenshoe option. Goldman Sachs is lead manager for the issue. Merrill Lynch and Warburg Dillon Read are co-lead managers. TSMC shares were again under pressure this week, the ADSs falling to $33 on Wednesday in New York. The premium at which the ADSs trade to the ordinary stock has also been falling, indicating greater selling pressure on Nasdaq than in the domestic Taipei market. The ADSs have traded at a premium of 68% on average this year, but this had slumped to 37% by Wednesday. The reduction also highlights the fact that more foreign investors are seeking and obtaining approval to become qualified foreign investors and are therefore able to invest directly - at a far lower price - in the local stock.

* European Investment Bank Rating: AAA