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British Energy has mandated Deutsche Bank and HSBC to arrange a £550m financing. The facility will be split into a one year and a five year tranche, with the greater part expected to be at five years. The margin is said to be in the mid- to late 40s.

Both the Fed and the ECB finally raised interest rates this week but while the 25bp European increase was less expected, the US dollar market was hit by other difficulties. Strong economic data last Friday persuaded any doubters that the FOMC meeting would result in a quarter point rate hike, but the swap spread widening that followed closed the market to all but borrowers such as Italy that had already committed themselves. Then on Wednesday, the Treasury announced an accelerated buyback of debt and a sharp reduction in 30 year supply, sparking a sharp inversion of the yield curve and leading to confusion and panic. Only Walt Disney braved the storm, successfully issuing a $750m five year global bond. Priced at the wide end of the 78bp to 80bp indicated range, the deal was well accepted by mainly US investors. The euro sector survived relatively unscathed. Market participants kept an eye on the continuing travails of the single currency, but most activity was unaffected. Only Fiat fell victim to the gentler spread widening in Europe, launching its Eu1bn 10 year into a difficult market, after which the spread widened from 86bp to 91bp over Bunds, having already been revised from nearer 80bp over. But UK engineering group FKI demonstrated that investors are searching for spread product with value on Thursday, when its Eu600m 10 year bond was snapped up by investors. FlowTex will today (Friday) raise Eu250m to Eu300m of seven year funds at around Euribor plus 150bp via Commerzbank and Dresdner Kleinwort Benson. On Monday, Deutsche and Dresdner will launch Heidelberger Zement's Eu1bn 10 year transaction at around Euribor plus 70bp. Public Power Company is readying its Eu300m to Eu500m seven year issue and has mandated Bayerische Landesbank at a price of Euribor plus 42bp. Corning Inc is planning to issue a global Eu500m two tranche bond in the week of February 14, following week long roadshows in Europe. The maturities will be five and 10 years. Goldman Sachs and JP Morgan will lead manage this debut bond for the US A3/A rated fibre-optics company. Unofficial price talk indicates a spread of swaps plus 35bp to 40bp for the five year and mid-40s over for the 10 year. Axa's Eu400m undated subordinated notes are being premarketed by lead manager Merrill Lynch and a syndicate which comprises ABN Amro, Deutsche, BBV, BNP Paribas and Warburg Dillon Read. The deal is being sold to the banks' private client systems. The issue will be a perpetual non-call five year subordinated bond priced with a coupon between 7.25% and 7.5% and payable on a quarterly basis. On Merrill's advice, Axa has registered the transaction in France, Amsterdam, Luxembourg, Spain, Germany and Switzerland to ensure pan-European placement. Launch is expected late next week. Meanwhile SG should soon launch its Eu300m tier 1 deal alongside joint lead Salomon. And SNS Bank is planning a Eu500m to Eu750m seven or 10 year bond towards the end of the month. Bank of Tokyo-Mitsubishi has appointed Merrill Lynch and JP Morgan to launch a global $1.5bn 10 year lower tier 2 transaction. Roadshows are planned for the week of February 14 with launch expected shortly afterwards. Banca Italease will launch its Eu150m three year FRN today (Friday). The deal, led by Banca IMI, is expected to pay a spread of 42bp over Euribor. Renault Credit International has mandated Bayerische Landesbank and DG to launch a Eu250m five year floater. Demand for long dated sterling product remains robust as evidenced by a string of triple-A taps and a new bond from ABN Amro. Next week further supply will be launched. CDC is expected to launch its debut sterling bond, a £200m 20 year issue via JP Morgan Stanley and Morgan Stanley Dean Witter. No official spread talk was available but the triple-A borrower is expected to command similar terms to the EIB, which trades in the mid-90s over Gilts. And Heinz should issue its £125m-£150m 30 year bond next week via lead manager Goldman Sachs. Finally, Rabobank is planning a £150m to £200m long dated issue through Warburg Dillon Read

NEWS of a possible rating upgrade for Mexico helped Pemex fight off the volatility spilling over from the US high grade corporate bond market this week to price a $950m oil backed receivables issue. The Rule 144A deal, led by Morgan Stanley Dean Witter, was split into two tranches: a $800m 9.03% triple-B portion with an average life of 8.6 years priced at 99.9808 to give a spread of 275bp over Treasuries; and a triple-A wrapped $150m portion with an average life of 11.1 years carrying a coupon of 7.8% and priced at 99.9342 to give a spread of 150bp.

At first glance there appears to have been little activity in the Middle East project finance market so far in 2000. However, behind the scenes bankers are working feverishly on a large number of mandates - either awarded or still being bid for - which suggests that this year may see a far wider group of countries and projects come to market from the region than in 1999. While last year was very much the preserve of the Qatari projects, this year states such as Kuwait, Saudi Arabia, Bahrain, Oman, Jordan and Egypt should all see projects being financed through the international syndicated credit market.

Deutsche Bank and Goldman Sachs are poised to launch the long awaited IPO for Infineon with the Siemens spinoff set to raise up to Eu6bn, making the deal the world's largest offer for a technology company. While the issue is widely expected to be a blow-out, banks involved in the deal have already begun to grumble about the size of the syndicate - saying the 14 member group will prove unwieldy and prone to disputes.

Six banks have won the mandate to arrange financing for debut borrower African Export-Import Bank (Afreximbank). The first part of this financing is a $60m bridge financing, split between the six. They are DG Bank, KBC Bank, Raiffeisen Zentralbank Österreich, Standard Chartered Bank, WestLB and WGZ Bank.

Finland Euroweek understands that Merita Bank with Unibank and Bikuben Bank have won the mandate to arrange the Eu250m senior debt package backing the leveraged buy-out of Findus - the frozen foods business of Nestlé - by EQT Scandinavia, the investment manager of the EQT Scandinavia II private equity fund.

* World Bank Rating: Aaa/AAA/AAA

Market report Compiled by Vusi Mhlanzi,

* ABN Amro Bank NV Rating: Aa2/AA/AA+

Sterling renewed its status as one of the most attractive funding currencies on Monday, when sterling swap spreads widened sharply and opened an arbitrage window to borrowers looking for deep sub-Libor funding. As with wider US credit spreads, levels opened up across the board. By Wednesday, 10 year spreads were at 106bp compared to 98bp on Monday, while 20 year spreads were 12bp wider at 138bp, compared to 126bp on Monday. Thirty year spreads widened by 10bp to 128bp.

SAINT GOBAIN, the French glass manufacturer and building materials group, has secured a Eu2bn credit facility from BNP Paribas and Chase Manhattan that will finance its recommended bid for Meyer International of the UK. But almost immediately after news of the mandate came out earlier this week, the deal was surrounded by controversy with some bankers claiming that Chase had won a sole mandate and signed up with the company, only for the company to invite BNP in as a joint arranger. Neither house would comment.