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CHINA FAILED to live up to its new found reputation as the safe haven in Asia this week when whipsawing markets ravaged a $500m global bond from the People's Republic and soured the trading debut of China Telecom, the country's largest equity offering.Despite signs on Friday that regional markets were attempting to stage a rally from the week's lows, casualties were already beginning to emerge.

CHINA FAILED to live up to its new found reputation as the safe haven in Asia this week when whipsawing markets ravaged a $500m global bond from the People's Republic and soured the trading debut of China Telecom, the country's largest equity offering.

PLANS for Euromarket transactions from sub-federal issuers from Russia were in a state of flux this week, with at least one potential issuer likely to abandon its first Eurobond issue and another changing the scale and timing of its deal. The Astrakhan region, however, announced that it had awarded Commerzbank a ratings advisory and lead management mandate for a DM100m five year debut Eurobond. This is the first time that a Russian region has mandated a Deutschmark denominated offering.

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THE German state of Hesse launched a DM1bn transaction targeted at international investors this week in a deal which provides a pointer to the increasingly competitive capital market expected in Europe after monetary union. When the euro is in place, investors are likely to look to new credits which offer a pick-up to government bonds. Regional states, as quasi-sovereigns which sometimes have better economic fundamentals than the sovereign, are likely to be considered a prime option after 1999.

JP MORGAN last week gave investors their first opportunity to buy commodity price risk in the form of equity. JP Morgan Index Funding Co sold $50m of securities whose redemption value at their three year maturity is tied to the Crude Oil Total Return Index, one of the components of the JP Morgan Commodity Index.

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THE REPUBLIC of Lebanon's $400m 10 year Euro/144A offering -- its longest stand-alone issue in the international bond markets to date -- this week became a victim of the spread volatility which has dogged emerging market issuance as economic turmoil in south east Asia scales new heights. Launched on to the screens on Thursday morning in London at an indicated spread of 235bp-245bp over the 6.125% August 15, 2007 US Treasury, the B1/BB- rated issue was eventually priced in the afternoon by lead managers Credit Suisse First Boston and SBC Warburg Dillon Read at a spread of 250bp over on a 8.625% coupon on an issue/fixed re-offer price of 99.61.

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