June 2001
| Euromoney June 2001 In the back parlours of the financial markets, where credit derivatives meet securitization, bankers are slicing and dicing credit to create a grand smorgasbord of investment products. The names of these delicacies are confusing, the recipes are closely guarded secrets and each firm has its own unique house style. But for firms and bankers with the requisite
know-how, there is plenty of money to be made. The top credit structurers – bankers with a background in quant, an understanding of credit and a flair for complex legal contracts – can name their price. - From single names to exotics
Credit derivatives are at the heart of credit markets, yet a mystique prevails among those on the outside of the financial industry over exactly how they operate. Stephen Stonberg of Deutsche Bank examines the future of the credit derivatives market.
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Euromoney June 2001
When its audacious bid to hire 40 debt markets bankers from CSFB failed, Barclays Capital quickly turned its attention to Deutsche Bank. In an effort to build up its US and global debt businesses, it has been quietly hiring for months. Now the big name new recruits from Deutsche must ensure this investment bears fruit.
Euromoney June 2001
The highly volatile debt capital markets of the past 12 months have provided an extraordinary set of challenges to borrowers, whether they be highly experienced and well-rated issuers or less creditworthy newcomers. The borrowers which Euromoney here hails as the best from across the world are those who have coped best with markets that one moment are closed, and the next eager for new issues, that one moment cry out for credit risk and yield, and the next are hostile to any but the best-rated names. Some issuers have succeeded by timing their entry into the markets shrewdly. Others have had to show abundant flexibility and innovation to raise funds when investors have been at their most risk averse. Sovereign and agency issuers have pursued the trend towards large, liquid deals, though some now fear investors are being saturated. A wide variety of lower-rated and even some high-rated names have pushed the boundaries of securitization technology in an effort to diversify funding sources. And public corporates have learned the importance of strong debt management to their equity valuations.
Euromoney June 2001
With banks increasingly consolidating or at least cross-linking their debt-arranger activities, Euromoney has concluded that its annual bond, loan and MTN rankings should appear as a single table. In this introduction to the results, Jennifer Morris looks at the ways in which boundaries between different areas of debt are becoming blurred and assesses the challenge to investment banks’ core business from commercial banks
Euromoney June 2001
Europe’s newly emerging mass affluent are the latest target – and the latest obsession – for financial services operators. However many players have yet to unveil either a clear strategy or the right products. Indeed some big names have already decided to cut their considerable losses and leave the market behind, convinced they won’t be able to make it pay. But whoever comes up with the winning formula is likely to enjoy a bonanza. Julian Marshall examines the marketplace
Euromoney June 2001
After a hectic period of consolidation, Portuguese banks have fed heartily off rapid economic growth, building substantial loan books, particularly in the retail sector. The boom is continuing but credit quality worries are beginning to emerge and a slowdown in growth could seriously hurt banks’ profits.
Euromoney June 2001
With the domestic economy still in a weak state, Japanese corporates are reluctant to go to the relatively expensive international bond markets for funding. Domestic borrowing is cheaper, particularly as banks are being encouraged by the government to lend on easy terms despite the hangover of bad debt. Only the highest rated Japanese borrowers are raising funds in international markets.
Euromoney June 2001
The pace of yen borrowing in international markets and in the Japanese domestic market by non-Japanese issuers has slowed just slightly in 2001, following last year’s boom. Downgrades of some large corporate issues have meant losses for Japanese buyers. But foreign names are still issuing yen bonds in healthy volumes and will continue to do so for as long as Japanese investors are deprived of attractive domestic alternatives.
Euromoney June 2001
Mergers drive many of the changes in the annual rankings of banks by shareholders’ equity. American and Japanese groups retain the top spots. But European banks have the market capitalizations to grow further through acquisition. By Andrew Newby, data from Moody’s.
Euromoney June 2001
Offered a rare chance to jump into the first rank of transition economies, the jewel of the Adriatic must choose between getting ahead and just getting by.
Euromoney June 2001
Iceland’s economy has boomed since joining the European Economic Area in 1993 brought market-based reforms. The economy has diversified, but now the government wants to rein growth in. That’s hit the stock market.
Euromoney June 2001
Monetary union’s effect on European investment patterns is giving rise to a host of new benchmarks. In both equities and bonds, index providers are scrambling for continental superiority. New providers can win market share quickly but the established names are fighting back.
Euromoney June 2001
The best guess as to the eventual size of Chinese banks’ bad debts is that they will be many times larger than initial official estimates. In a desperate effort to clean up their balance sheets, banks have shifted bad debts to asset management companies. But there’s no sign that these can offload them to new money investors or engineer decent recovery rates. And there’s plenty more to come. Ministers may feel a little queasy when they get the final bill.
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Issuer: People’s Republic of China
Amount: $1 billion and e550 million
Types of deal: Eurobonds
Date: May 17 2001
Bookrunners: Goldman Sachs, JP Morgan, Morgan Stanley (for dollars) and Barclays Capital, BNP Paribas, Deutsche Bank (euros)
Euromoney June 2001
European banks risk finding themselves
outpaced by US competitors in the bid to
protect and exploit their intellectual
property.
Euromoney June 2001
Global head of corporate finance and recovery, PriceWaterhouse Coopers