PRIMARY EUROSTERLING MARKET BOOMS DESPITE RATE CUT
Two new eurosterling bonds were launched
today, making a total of 10 new deals in the sector so far this
month, as borrowers rush to cash in on a bull sterling market
fueled by the strength of the pound and pre-budget euphoria.
    The Bank of England finally gave way to a 1/2 point cut in
banks' base lending rates earlier today, but dealers said this
had been largely discounted and was not likely to detract from
the current popularity of sterling-denominated investments.
    "Sterling, in any shape or form, is flavor of the month and
we're set to see many more eurosterling deals," one dealer said.
    Today's new eurosterling bonds were a 10-year, 100 mln stg
deal for Sweden at 9-1/2 pct and priced at 101-1/4 pct, lead by
Baring Brothers and Co Ltd and a 14 year 60 mln stg convertible
deal for Storehouse Plc launched by SBCI International Ltd. "We
thought we saw a proverbial flood of new deals with the 14 we
had last month but it seems March will beat February hands down
with 10 already," one eurosterling specialist said.
    "Optically, psychologically, these single figures are much
more attractive for the borrower. Eurosterling looks like a
cheap and attractive way to raise your money," he added.
    This accounts for the wide variety of borrowers who have
tapped the sector recently, ranging from sovereigns such as the
Kingdom of Sweden today, continental banks including
Commerzbank and Deutsche Bank and British corporations.
    Another U.K. Merchant bank analyst noted that the current
vogue for eurosterling enabled several corporate borrowers last
month to offer paper priced below comparative gilt yields.
    A Storehouse official confirmed that the issue was aimed at
Swiss and German investors who were showing good interest.
    This is the first entry into the long term international
capital markets by Storehouse, British designer Terence
Conran's retail conglomerate which incorporates U.K. Chain
stores Mothercare, British Home Stores and Habitat.
    "We have been considering the move for quite some time now
and the current strength of the eurosterling sector provided
the perfect opportunity and spur for us to finally tap the
market," Lance Moir, corporate treasurer at Storehouse Plc told
Reuters.

