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Vodafone AirTouch priced a $3.75bn two tranche short term FRN late yesterday (Thursday), the first bond issue relating to the bidding war for the UK's UMTS licences to hit the market. Bond and loan market participants are bracing themselves for an onslaught of telecoms funding as - with several European countries set to follow the UK's example of awarding third generation mobile licences after auctions - Vodafone and its rivals seek to finance costs associated with the new technology.

Vodafone AirTouch priced a $3.75bn two tranche short term FRN late yesterday (Thursday), the first bond issue relating to the bidding war for the UK's UMTS licences to hit the market. Bond and loan market participants are bracing themselves for an onslaught of telecoms funding as - with several European countries set to follow the UK's example of awarding third generation mobile licences after auctions - Vodafone and its rivals seek to finance costs associated with the new technology.

Ballooning swap spreads in the dollar markets and continued weakness in the euro weighed heavily on bond markets this week. US dollar swaps spreads widened sharply on Wednesday and yesterday (Thursday) in response to declining equity markets and nervousness ahead of today's (Friday) non-farm payroll data. But before the volatility set in, US financials Household, Heller and Associates Corp were able collectively to raise $3.9bn of global debt. Household's five year deal was doubled to $2bn and was still twice oversubscribed at the enlarged size. But the borrower had to pay considerably more than its usual targets to achieve successful execution. Some 20% of the deal was distributed internationally.

* British Telecommunications plc Rating: Aa1/AA+/AA+

Belgium Telenet is tapping the loan market for Bfr12bn (about Eu300m), and has mandated Merrill Lynch to lead the facility. KBC has come in as joint lead arranger, and has underwritten half of the deal, after Merrill Lynch originally underwrote the whole deal.

* Banca Popolare Dell'Emilia Romagna Rating: A/A- (S&P/Fitch IBCA)

* Argenta Nederland NV Guarantors: Argenta Banque d'Épargne, Argenta Société d'Investissements SA

Opinion is divided on the progress being made by high yield bonds as an asset class in Germany. Some say that recent upheavals such as the FlowTex fiasco have made local investors wary of issues offering triple-digit yields. For evidence, they point to the disappointing response among German investors to some of this year’s landmark transactions in the European high yield market. In the case of Level 3, for example, which at Eu800m was the largest European high yield issue to date, German investors accounted for a disappointingly low 3.5% of demand.

Germany’s corporates are finally realising that in order to raise successful bond issues they need the ratings agencies on their side. For years they have relied on local investors and internal ratings and relationships. But unrated issuers are finding it increasingly hard to attract investors’s attention as more and more companies come to market with ratings in order to tap a hungry international investor base. Philip Moore reports.

Much has been said of the huge growth potential of the German corporate bond market. Some have even likened its growth to that of the internet. But in terms of volume of issuance, the German corporate bond market remains tiny compared with Germany's GDP. However, with the European M&A boom showing little sign of slowing down and with Germany's corporates leading the way in terms of restructuring - boosted by tax reforms concerning the reduction of capital gains tax on corporate restructuring - the key ingredients for a rapidly expanding market are finally in place.

Southern European competitive local exchange carrier Grapes Communications this week resisted pressure to increase the equity kicker on its unrated Eu200m debut bond issue, which was punchily priced on Wednesday with 3% of warrants and a 13.50% coupon. The Eu200m 10 year non-call five financing, led by Chase Manhattan and Merrill Lynch, was marketed with the 13.50% coupon and 2% to 3% of equity.