Sovereign Bond Spreads:

 

Significant New Issuance - CSFB Commentary:

?	The emerging debt markets were less volatile this week following the stabilization in the Argentine financial sector. Although there was no real progress in improving the country's fundamentals, international reserves and private sector deposits stopped falling, generating positive momentum for the market. As a result, Argentina broke through an important 1400 resistance level this week and the positive tone spilt over into other markets. The Turkish Eurobond market had a very strong week supported by dramatic improvement in the local market: the Central Bank cut its overnight lending rate from 62% to 60% after a successful T-Bill auction on Friday and local debt yields declined sharply. Most of the Turkish curve was very well bid against the background of revived investor activity. The Turkey 2030 benchmark reached its high since the beginning of July at +935 bps spread on Thursday. The Russian market also gained this week on the back of both the general EM sentiment and local news on the incorporation of the "financial reserve" (designed to accumulate US$1.8bn to help the government service its debt in 2003) into the draft budget for 2002. Russian assets are now trading only 1 point below their highs since the 1998 crisis. For Central and Eastern European assets this was a strong week with good demand especially for sovereign bonds, although there was no significant move in prices. Despite the overall positive sentiment, Friday witnessed some weakening in all the emerging markets, caused mainly by the technical factor of profit taking once the market reached two month highs. The EMBI+ Index closed only 4 bps tighter on the week at +882 bps after touching +861 bps during the Thursday session.
?	On its 30th August meeting, the European Central Bank lowered its benchmark repo rate by ? point to 4.25%. European benchmark bonds reacted positively to the announcement and now are pricing in at least another ? point rate cut this year. This is good news for issuers of *uro denominated bonds as the long awaited rate cut will lower European benchmark yields going forward.
?	Fitch upgraded the Republic of Estonia's rating to "A-" from "BBB+" on Thursday reflecting its strong GDP growth, fiscal deficit reduction and good fiscal prospects.