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The battle for control of the Italian telecom industry will move firmly into the international market today (Friday), when Telecom Italia launches syndication of a sharply priced Eu10bn loan aimed at playing a crucial role in its defence against Olivetti’s hostile Eu35bn bid.

THE BATTLE for control of the Italian telecom industry will move firmly into the international market today (Friday), when Telecom Italia launches syndication of a sharply priced Eu10bn loan aimed at playing a crucial role in its defence against Olivetti's hostile Eu35bn bid.

Jumbo issuance leaped to Eu8bn this week as improved arbitrage opportunities prompted several mortgage banks to launch liquid transactions. The deals confirmed the changing nature of the jumbo primary market - many of the leading issuers of jumbos appear to have accepted the need for new issues to be bookbuilt with a syndicate of underwriters below the bookrunner level.

Lucent Technologies made a hugely successful debut in the international bond markets this week when it launched a $1.36bn 30 year global bond via Bear Stearns. Everything had pointed to a successful transaction before launch. Lucent is at the cutting edge of the hottest sector in the international financial markets - telecommunications - and is one of the most popular credits in the US bond market.

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Action in the swaps market this week was dominated by the continuing multitude of new issues in the euro bond market, although arbitrage in the dollar market showed signs of returning. By Thursday, 10 year dollar swap spreads were at a mid-market of about 77bp, a couple of basis points wider than the close last week. This opened some arbitrage opportunities for borrowers of dollars, but there were few issuers looking to step into the market. Japanese entertainment group Sony is poised to bring a $1bn 10 year global, a deal which is highly likely to be swapped.

Corporate credits continue to fill the pipeline of new issues in the coming weeks in both the euro and the dollar sectors, with investors' hunger for telecoms paper set to be satisfied by a host of jumbo issues from the market's hottest sector. AT&T is at the forefront of most syndicate managers' minds, with roadshows set to begin on Monday for its jumbo bond financing. AT&T and its lead managers Merrill Lynch and Salomon Smith Barney will spend three days with investors in Europe before heading to the US. Its multi-tranche issue, which is likely to comprise short, intermediate and long term tranches, should be launched the following week.

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