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Arguments over how to price a deal will never go away, even for frequent borrowers. Most have 15 or more investment banks chasing the mandates, offering the issuer all sorts of advice and inducements. A treasurer who chooses an aggressively priced deal might save his institution a few thousand dollars over 10 years and make himself look good to his bosses, but if it's too aggressive and investors don't buy it, could this harm his future issues? And if the deal is too generous, why should investors bother to buy paper issued later that might be more accurately priced?

I've just returned from Germany, visiting the great in government, bureaucracy, Bundesbank and the European Monetary Institute. I'm convinced the Bundesbank will raise interest rates by 25 basis points before the year-end and by around 200bp by the end of 1998.

With Japan's financial deregulation gathering pace - and foreign players emerging as the clear winners - Japanese institutions have been slow to formulate defence strategies. Some see their salvation in growth areas such as investment banking and asset management. But as Jack Lowenstein reports, their real future may lie in linking up with outsiders. And foreign acquisition of Japanese firms may not be far off.

For all the talk of designing exotic derivatives for hedge funds, the most useful service a bank can provide is often good old-fashioned credit. Even so hedge funds are prompting banks to reorganize since their demands straddle many departments. The funds' importance as customers is starting to outstrip that of institutional investors, and the banks are dancing to their tune. Andy Webb reports.

Slovenia is the wealthiest country to have emerged from communist rule, but is it losing its way? Exports are flagging, industry is becoming politicized and the stock market is shaky. Even the country's successful banking reforms have ground to a halt. Gavin Gray reports on the dangers ahead.

Issuer: ITT Promedia

Issuer: Rheinische Hypothekenbank

Market-watchers may detect just a hint of arrogance when a country not yet six months out of civil war starts eyeing the markets. Even more so when the country's new leaders have consistently directed their vitriol at powerful governments and organizations such as the US, the UN, the IMF and the World Bank. But Laurent Kabila, president of the new Democratic Republic of Congo (DRC), has been dropping some heavy hints of late.

The legalistic stuff at the back of loan agreements is too dull for most bankers to bother about. But you need to know why it is there. By Christopher Stoakes.

Banca Popolare di Milano (BPM) has come up with an innovative bond linked to top names in the clothing, eyewear and accessories industries. The L20 billion ($11 million) self-led fashion-linked bond is based on an underlying basket of 12 international stocks ranging from Benetton, Bulgari and Gucci to Escada, Hermès, Luxottica and Louis Vuitton Moët Hennessy. The securities pay interest when the paper matures in two years' time: the holders will receive the appreciation between the value of the basket on payment date and its average price over the life of the bond.

Just as Wall Street bankers go back to work from their summer vacations, the latest financial thriller is hitting the bookstores.

Take a trip to Moscow and you might come away with the impression that AKA Bank is one of Russia's largest financial institutions. A huge advert for the bank bears down in passport control outside Sheremetyevo airport and also appears on the back of cloakroom tags at the Bolshoi theatre, accompanied by the slogan "the customer is king at our bank" - a concept new to anyone accustomed to the Byzantine ways of Russian banks.