CURRENCY SECTORS CONTINUE TO FEATURE EUROBOND TRADE
Early dollar straight eurobond trade was
quiet with currency sectors, particularly eurosterling,
continuing to perform strongly, closely reflecting current
trading patterns on the foreign exchanges, dealers said.
    Eurosterling bonds continued to rise steadily, bolstered by
the extremely ebullient tone of the U.K. Government bond market
on a combination of positive U.K. Economic fundamentals.
    The dollar was initially stabler but most dollar straight
bonds were static in dull trade. A handful of issues showed
signs of weakness but dealers said investors were awaiting
today's release of U.S. Leading indicators for January.
    The U.S. Data due out this afternoon is expected to be
weak, placing the U.S. Unit under renewed pressure and robbing
the market in dollar-denominated eurobonds of fresh trading
impetus, one dollar straight trader said.
    "It's going to be another tedious day and I can't see how
anybody is going to make any money," he said.
    Eurosterling issues continued to rally on the back of
general sterling euphoria -- with the U.K. Currency trading at
six month highs on interest rate optimism and the strength of
the domestic equity markets.
    Eurosterling bonds saw early gains of up to half a point.
    However, some eurosterling dealers noted the bonds could
soon fall back marginally if -- as expected -- professionals
stepped in to take profits at current healthy levels.
    Trade in mark-denominated bonds was expected to be subdued
today due to pre-Lenten carnival festivities in West Germany.
    There were signs of reawakened investor nerves affecting
trade in the floating rate note market which yesterday started
the week extremely quietly after a hectic sell-off last week.
    FRN dealers said paper of U.S. -- and also of Canadian --
banks was seeing some pressure as a result of recent press
reports focussing on their exposure to Latin American debt.
    "(Brazilian Finance Minister Dilson) Funaro's visit to
Europe has also brought the spotlight back onto the debt crisis
after things had more or less quietened down following the
first shock statements last week," one FRN specialist said.
    Despite the dearth of activity in the dollar straight
secondary market, two new dollar issues were the only early
features on the primary market.
    These were a five year 150 mln dlr deal launched by Morgan
Guaranty Ltd for Saab Scania at 7-3/4 pct priced at 101-3/4
pct.
    The other issue was a 100 mln dlr deal -- also due 1992 --
for NV Nederlandse Gasunie paying 7-1/4 pct and priced at
101-1/8 pct, with Citicorp Investment Bank Ltd as lead manager.
    Dealers predicted reasonable demand for both issues due
mainly to a lack of fresh, good name paper in the market.
 REUTER
