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In the MTN world size matters. Since the record-breaking $85 billion Travelers-Citicorp merger in October 1998, Salomon Smith Barney's (SSB's) MTN business has gone from strength to strength. As the Euromarket grows, domestic houses which do not have cross-border access will increasingly lose out to banks with global reach. In the next millennium it is likely that a greater proportion of volume will be handled by a smaller group of investment banks. SSB is the top dealer of MTNs so far this year in terms of non-syndicated trades. According to MTNWeek's back page issuance league table it has done 147 deals amounting to $3.99 billion-worth of deals. Its percentage share of the total is over 13.4 table which includes non-syndicated deals of less than $250 million and excludes SPVs, self led deals, and issues with a term of less than 365 days. In May 1998, before SSB's merger with Nikko Securities, and Citigroup, its share in the market for non-syndicated trades of the same criteria (see MTNWeek back page league tables) was less than a 9 according to MTNWare. Increased distribution has been the key benefit of the merger. Through Nikko, SSB has gained access to important investors in Japan. Its MTN distribution is evenly spread now between Japan and Europe. Peter Jackson, managing director, Euro-MTNs at SSB, says: "We now have massive regional distribution in Japan, much of it to traditional investors to which Salomon Smith Barney as a foreign bank previously had little access. This huge foothold in Japan is something we have over our US competitors." Historically SSB was a strong dealer in yen. Since its merger with Nikko, it has become the number one house, by a significant margin, in terms of volume of yen traded and number of deals. It has done trades totalling $1.8 billion-worth of yen, in 1999, and has more than doubled its share of the total volume to 28.7:This is excluding self-led and financial repackaged deals. SSB's nearest competitor, Nomura Securities, has a 15.7:hare and has done trades totalling $1 billion. The MTN desks of Salomon Smith Barney, Citibank and Nikko have been consolidated but the emphasis is on expansion. The new team has 13 traders in four branches, and a legal team that has doubled to six. The European fixed income sales force at SSB has increased from 60 to 117. The MTN desk is placed within new issues and works closely with debt capital markets, syndicate and derivatives desks. Jackson, at SSB, explains that the fact the three firms had strengths in different areas means no one has been displaced or left without a role to play. Which is perhaps where other mergers have failed. Since much of MTN business is relationship based it is important that issuers are familiar with new set-ups after a merger. Myles Mcbride, Euro-MTN product management, at SSB, says: "There hasn't been any confusion for issuers with our name, since the merger was well publicised. And with it being an additive merger all the same faces are still here." A financial institution the size of SSB has to operate efficiently. The trade-off is that this could be at the expense of personal contact with borrowers. However, Per Akerlind, executive director and treasurer, at Svensk Exportkredit, is not concerned that the expansion of SSB's business will mean less attention is paid to issuers. He says: "That has always been a threat and it is the same with everyone whatever the size of the bank. We will always be competing to get to the pole position with our dealers." The increase in business has brought added pressure. Maintaining relationships with clients was of less concern to SSB before the merger. Jackson, at SSB, says: "Five years ago Salomon Brothers was a selective trading desk. We didn't have the same breadth of relationships and we could choose what we focused on. Now we offer an all-encompassing service and with this comes more responsibility. Its more like a machine now, we have to process things quickly and keep relationships with issuers." Marc Falconer, vice-president Euro-MTN product management at Salomon Smith Barney, says that the MTN desk is under pressure to perform because of links to other business within the bank. He says: "Salomon Smith Barney's Euro-MTN performance is becoming one of the benchmarks by which issuers measure [other] relationships [with us]. Issuers increasingly look to our private placement capability as a way of deciding if they should award new public mandates to us. This is where the prestige is." Citibank has a large global retail presence, with strong relationships in regional areas. This is something that SSB didn't have before the merger and can now exploit. Falconer, at SSB, explains that through Citibank's relationships, SSB is better placed to access these local areas to find new investors. Falconer says: "From a distribution perspective, we'd like to improve in those countries where domestic houses are still very strong, for example, in Scandinavia. We need to penetrate into these domestic areas and compete with the local houses for investor demand." Citigroup can play every card in the pack, including the Euro-CP hand. Citibank ranks second in the Euro-CP dealer-league tables for programmes signed this year, according to CPWare. Including its latest signing, Sonera Group, Citibank has arranged six programmes out of the 20 signed since January 1999, and is a dealer off 18. Colin Withers, head of short-term products, at Citibank, says: "We have filled a gap in the fixed income product offerings of SSB, which had existed since Salomon Smith Barney pulled out of CP in 1987."

Barclays Capital is added as a dealer to Sara Lee's $1 billion Euro-CP shelf.

Sara Lee has increased its $1.5 billion Euro-MTN shelf to $2.5 billion. Bank of America, Barclays Capital, Bear Stearns, Chase Manhattan, HSBC and ING Bank have been added as dealers.

Finland Lead arranger Citibank/SSSB has closed the syndication of the Eu1.7bn acquisition facility for Metsa-Serla Oy. The deal, which will be signed on Monday, was well oversubscribed in the market but will not be increased.

SEB has raised the ceiling off its MTN shelf from euro3 billion ($2.79 billion) to euro4 billion. Salomon Smith Barney has been added as a dealer.

It is only six weeks since the euro became a reality and already thoughts are moving to those countries outside Euroland. Sweden is tipped as being one of the first to join the second wave of Emu. If it does, there is one particular borrower certain to make heads turn. Svensk Exportkredit (SEK) has launched 34 deals off three different MTN programmes so far this year, and as a result it is the fifth most frequent issuer. However, investors aren't buying this paper just because of Sweden's convergence potential. By focusing on liquidity and credit-worthiness, the borrower always positions itself well. SEK's approach is built on innovation. It's debt portfolio boasts the first Samurai MTN programme, a Matador MTN programme, and the first litas issue in the Euro-MTN market. Having 22 debt programmes is an advantage. Per Akerlind, executive director and treasurer at SEK, explains: "It is the most efficient way. We always want to be prepared. If, for example, a Japanese investor wants Japanese law we can offer him a Samurai MTN as a fast, cost-effective solution." The secret to juggling many programmes successfully is being a pro-active issuer. SEK self-arranges its biggest programme, a euro15 billion ($16.98 billion) Euro-MTN facility, which has grown by one billion euros a year since it was signed in 1991. Akerlind explains: "For the last five or six years we have had our own in-house documentation team. You have to be in the driving seat." Sam Amalou, director, debt origination at Daiwa, a dealer off the Euro-MTN facility, echoes this sentiment. He says: "SEK's success lies in its flexibility. It is not constrained by the necessity to get the authority of higher powers as its management is very technically aware and always able to respond quickly. SEK is open to all kinds of ideas. If you ring it up to discuss a new product, it never says no." Having a named dealer group off a programme is not necessary for such a sophisticated borrower. Akerlind says: "Of course, I'm willing to accept reverse enquiry. For me, and for other market participants, dealership doesn't mean anything anymore." One of the reasons investors buy SEK's paper is its interesting credit story. Ever since SEK was established in 1962, it has been half-owned by the Swedish government. Moody's and Standard & Poor's rate SEK sovereign-equivalent: at Aa2 and AA+ long-term. Salomon Smith Barney (SSB), lead managed two yen-denominated FRNs for SEK this year. Peter Jackson, managing director and head of MTNs at SSB, says: "It has a sovereign-related status which means that it sells well in Japan where there are many investment restrictions. One of SEK's key funding advantages is that it combines this special credit status with a real banking expertise, something which is a relatively rare combination." However, SEK feels its quasi-sovereign status is constrained by Sweden's rating, even though SEK does not carry a government guarantee. Akerlind says: "Our balance sheet is stronger than our rating would suggest." According to one of SEK's dealers, its pricing levels in the private market support this argument. He also thinks that although the borrower usually trades in the mid-teens above Sweden, it would prefer to trade in single digits in the public market. He says: "The public market story is different. SEK cannot offer sustained liquidity and must pay a higher premium than it would wish against Sweden." Therefore, SEK knows where its priorities lie: concentrating on providing liquidity in the primary markets and generating better end-cost of funding than many of its rivals. For many years, it has managed to provide liquidity to its investors in the secondary markets by buying back its own paper and restructuring its deals. More importantly, it is open minded about structures. It was one of the first borrowers to issue equity-linked paper. And while most borrowers refuse to do credit-linked notes, SEK is issuing increasing numbers of them. Akerlind explains: "We have no problems issuing credit-linked notes. We want to take responsibility as a developer of this market. If you can lay off your risk to investors then the credit market can grow." It is a structure Akerlind feels has potential. He says: "Today the market is inefficient. The bid/offer spreads in the credit derivatives market are so wide as to be impossible to use for credit hedge purposes. But soon, with the help from credit-linked notes, the credit derivatives market will create a liquid corporate bond market in Europe." Yet, many dealers are still cautious. Jackson at SSB says: "Credit derivatives remain a very sexy area, but credit-linked issues still represent a relatively small percentage of the market. They are a good opportunity to achieve cost-effective funding, but are not central to an issuer's funding policy." There are also relatively few investors willing to buy highly-structured paper, but SEK has managed to capture a large percentage of those which do. SEK is the second biggest issuer in Europe outside of Euroland, according to MTNWare, in terms of value of trades. Its potential will be realised if, and when, Sweden joins Emu. Akerlind explains: "If Sweden should join Emu - and that likelihood, in my opinion, is far greater today than two or three months ago - our sovereign ceiling will be removed and we'll have a chance to be upgraded due to our strong asset quality."

MERRILL Lynch completed the $1.8bn sale of part of the controlling Bertarelli family's stake in Europe's biggest biotechnology company, Ares-Serono, yesterday (Thursday). The deal closed five times covered. The sale was priced at Sfr1,550 - a slim discount to the last sale on the Swiss market of Sfr1,570. "The pricing was a gesture from the vendor," said a banker. "It was a great way to go into the summer break."

As borrowers wind down for 1998 and put final preparations for Emu in place, MTNWeek decided to investigate their daily routine. Best place for inspiration must be Sherlock Holmes' headquarters on Baker Street, base of Abbey National Treasury Services (Abbey). Far from putting their feet up for the year, the team at Abbey were hot on the heels of a £

Achmea Holding has named the dealers off its euro2.5 billion ($2.38 billion) Euro-CP programme as ABN Amro, BNP Paribas, Barclays Capital, Citibank and ING Barings. The six notes to date have raised the equivalent of $69.09 million. The facility is rated A-1 by Standard & Poor's and is arranged by Citibank.

Ghana The bidding contest for the arranging mandate for Ghana Cocoa Board's (Cocobod) annual pre-export finance facility is underway. This year's facility is expected to be slightly smaller and higher priced than the finely priced 1999 deal. A fall in cocoa prices and a slight weakening in Ghana's economic position should contribute to a higher price.

Artesia Overseas has added Lehman Brothers and Swedbank as dealers off its $4 billion debt issuance programme.