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Germany's regional states -- the Länder -- are faced with tough choices regarding their funding programmes. They realise that Emu will present them with new challenges, but also new opportunities. But they have yet to come to a conclusion on the best way to face up to them. The strongest states are increasingly looking to go it alone in diversifying their investor bases. The smaller ones, however, need to improve the reception to their pooled jumbo financing. And all the German Länder may need to acquire ratings before they can achieve a truly international distribution

Germany's IPO market is poised for potentially massive growth, even if the recent bull market conditions do not last indefinitely. Landmark deals such as the privatisations of Deutsche Telekom and Lufthansa -- and a string of major corporate flotations -- have improved the efficiency of the primary market through the introduction of bookbuilding and other international techniques. They have also brought about structural change in the ownership of the German equity market, creating a more mature and stable domestic investor base in a market traditionally vulnerable to fickle foreign investment flows. With the newly established Neuer Markt offering an alternative venue for Germany's vast ranks of middle-market companies to list their shares -- and with innovative equity-linked products starting to appear -- the opportunities for German companies to capitalise on the country's fast-emerging equity culture are growing all the time.

The nature of the Euro-Deutschmark sector has undergone significant change over the past 18 months. Although it remains dominated by higher-rated issuers, there has been a marked increase in volumes of lesser-rated, riskier products.

For industrialists, investment bankers, institutional investors and individuals in Germany alike, the changes sweeping the country's financial markets are breathtaking in their scale and speed.

Internationalisation is the theme running through the whole of Germany's domestic debt markets as the country's issuers and bankers prepare for life in a single European capital market.

AMID ASIA'S greatest market chaos in recent history, president Suharto's politicking with the IMF and plummeting select metal prices, PT Aneka Tambang (Antam), the Indonesian state nickel and gold mining outfit, could not have picked a worse week to price its initial public offering. One banker in the syndicate said the deal, which ended up being 1.5 times subscribed, should have been pulled during the Taiwan and Hong Kong market plunge. Had the deal been put off until the region showed more signs of economic stability, he added, Antam could have enjoyed a much more successful sale.

FIRST CAME Asia's financial difficulties, then the currency devaluations and last week the beginning of the stockmarket slide. It could not be long before region's debt markets were hit as well, and Asian bonds this week suffered a bout of unprecedented volatility as spreads soared, then recovered some ground but remained at levels unimaginable only weeks ago. Debt traders, salesmen and syndicate managers joined their equity counterparts with their eyes glued to the screens as Asian Euro and global bonds see-sawed in line with the region's stockmarkets.

THE Asian financial crisis has accelerated Korea's decision to open its bond market in an attempt to boost capital inflows and stabilise local markets. The announcement came after the Korean currency slid to a record low of W964/$ against the dollar on Thursday. The plan, originally scheduled for the end of 1999, will allow foreign investors to hold a maximum of 30% of each unsecured long term corporate bond offering, and individual foreign investors up to 6% of corporate bonds. Fifty percent of non-guaranteed convertible bonds issued by conglomerates from 1998 can be held by foreigners, an increase from the current 30% limit.

ASIA'S EQUITY markets suffered a week of unprecedented volatility this week as stockmarkets saw both record daily losses and daily rises. It left the pipeline of deals expected to come to the market in the next two months looking decidedly threadbare. On Tuesday, Hong Kong's Hang Seng index fell by more than 14%. The next day it bounced back 17% as Wall Street rallied. On Thursday it fell again, prompted by a decision by Moody's to place the outlook for Hong Kong banks on negative and, in particular, to review the financial strength of Hang Seng Bank and HSBC.

BRAZIL BECAME the focus of world market attention yesterday (Thursday) as its central bank rushed to defend its currency from speculators and to allay investor fears that the country would be the latest emerging market economy to suffer an exchange rate crisis. The central bank was forced to spend as much as $4.77bn on Tuesday, in net terms, to defend its currency, about $200m on Wednesday and it intervened in the market four times to spend about $1bn on Thursday. This makes a sharp dent in its previous level of $61bn of foreign exchange reserves.

* Russia's National Reserve Bank (NRB) which is planning to tap the Euromarket with a debut issue in 1998, this week received its first international credit rating. IBCA awarded the bank a BB long term rating -- one notch below the agency's BB+ sovereign ceiling for the Russian Federation. Formed in 1993, NRB is 65% owned by Russian gas giant Gazprom, for which the bank acts as a de facto investment banking arm.

THE LATIN AMERICAN new issue pipeline evaporated this week as spreads in benchmark Latin global bonds collapsed by more than 400bp and currency speculators, looking for a fresh target outside of Asia, began attacking Brazil and Argentina. Several billion dollars of planned new issues have already been cancelled and most frequent Latin issuers like the Republic of Argentina have announced that they will stay away from debt markets for the rest of this year if necessary.