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Investcorp's financing of the acquisition of Welcome Break from Granada was a victory for innovation in the face of accepted market wisdom. The solution -- a securitisation involving debt maturities out to 20 years, all backed by non-contractual cashflows -- was astonishing.

A EUROPEAN Commission draft directive to impose a minimum 20% withholding tax on cross border interest payments, was this week blasted by bankers as outrageous, disruptive and having serious repercussions for the Eurobond market. Under the planned directive, EU member states would have to either levy the tax themselves or provide information to other member states on interest income from savings, including Eurobonds, of EU citizens.

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WITH many continental markets closed for business on Thursday and the UK and US looking forward to a long weekend, activity in the core markets was thin. Some uncertainty over whether the FOMC would raise US interest rates put a further brake on issuance, but US trade data, German money supply figures and no change in US rates pushed government bond markets higher. With Asia still causing concern and dollar buying at an all-year low, it was a brave issuer that tapped the markets this week.

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GOLDMAN Sachs has closed the sub-underwriting phase on one of the most successful syndications this year in the Euroloan market. Banks committed $5.75bn to the $2.6bn credit facility backing Bacardi's purchase of Dewar's Scotch Whisky and Bombay Gin from Diageo. The blow-out transaction showed the depth of demand for the right name in the syndicated loan market, triumphing despite early criticism that the pricing, which ranges between 25bp and 45bp over Libor, was too tight for an acquisition related facility arranged for a Bermuda based company. The deal was also launched at a time when a number of UK acquisition related deals were struggling in syndication due to poorly perceived deal structures seen as over-leveraged, or in sectors that were vulnerable to economic downturn.

THE REPUBLIC of Italy demonstrated the pent-up demand for European sovereigns in the dollar sector this week when it launched a $2bn 10 year Eurobond at the best sub-Libor rates that it has ever achieved in the international markets. Italy was able to take advantage of the lack of competing EU sovereign supply as well as arbitrage in the dollar market to generate sub-Libor funding of minus 19bp -- below even what it can achieve in domestic BTPs.