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New Year gets off to a fiery start

Issues by sovereigns, sub-sovereigns and agencies tend to do well at the start of the year, mopping up high January cash balances. But in 2005 quality issuers have done even better than usual, raising hopes of a good year.

TRY TO BLAME the poor performance of a capital markets deal on the conjunction of phases of the moon and the path of the sun and you'll probably be given short shrift. But lunar and solar behaviour have a huge bearing on sentiment in the debt capital markets at the beginning of every year because they are used to calculate the date of the Chinese New Year.

In 2004, Chinese New Year fell on January 22. That closed the Asian markets at the end of the month and meant that some large agency borrowers had to do quick deals in the first two weeks of January. European Investment Bank and KfW's $3 billion five-year deals, while successful, weren't the blowouts that some had expected.

Chinese New Year this year falls on February 9. "There's less time pressure on issuers because of a later Chinese New Year," says Catriona Brown, head of sovereigns, supras, and agencies at Nomura in London. "Less of a rush means more time to choose the right maturity, currency, and issue strategy."

And judging by the reception quality borrowers have got so far, in different currencies, across the curve from three years to 30 years, 2005 for debt investors will be the year not of the rooster but of the bull.

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