March 2001
| Euromoney March 2001 Almost four years after its merger with Dean Witter, Morgan Stanley's new-look asset management division is finally taking shape under Mitchell Merin. Bringing the cultures of disparate investment houses under one roof has involved asking headstrong individuals to embrace a team ethic. The new beast may have the potential to achieve its aim of being the world's number one fund manager in all asset classes. Even Europe and Asia, which have so far resisted its advances, could yet succumb. However careful jockeyship will be required to keep star managers happy and the charge on course. Later this year the Morgan Stanley name will oust Dean Witter yet it is Dean Witter alumni who hold the key positions, both in the investment division and in the Morgan Stanley Dean Witter group at large where internal divisions have started to surface. Merin and his team talk exclusively to Julian Marshall - A man on the move says it’s good to talk
After trying to be in four places at once, Morgan Stanley’s chief investment officer, Joseph McAlinden, is looking forward to moving to a permanent base, on the Avenue of the Americas. - The foreign language challenge for New York
Morgan Stanley is making its latest attempt to woo UK institutions with the launch of its new multi-asset-class product.
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Euromoney March 2001
The jaws of a trap are closing on Europe’s telecom companies. Credit rating agencies and debt providers will punish them unless they reduce the huge debts they took on to build in new markets. The telecom companies have promised to do this by floating subsidiaries and selling assets. But the very equity investors that encouraged them to leverage up and go for growth won’t buy these now. The banks won’t lend either and more downgrades are likely. The scales have fallen from debt and equity investors’ eyes. Where once stood, solid, dependable, utility-like incumbents, they now see risky, new-economy companies that have bet heavily on unproven technology and have limited access to the funding needed to make it pay. The telecom companies may have to take drastic action in order to survive.
Euromoney March 2001
France Telecom has set a troubling precedent for all those telecom companies that were desperately hoping to turn to the equity markets to raise funding and reduce their leverage.
Euromoney March 2001
So far, Telecom Italia is the only telecoms company to make public plans to issue a securitized bond. It will raise up to Eu1 billion in the second quarter of 2001 by selling bonds secured on fixed-line customer bills.
Euromoney March 2001
They started by trying to update the crude minimum capital requirements for international banking established in 1988. But the Basel Committee have been seduced by a new idea: let banks regulate themselves and get the market to police the banking system. Can we rely on the models banks use to calculate their capital? And do the regulators really understand what the banks are up to?
Euromoney March 2001
One of the biggest talking points in the Basel accord is the proposed charge for operational risk. But devising a system for monitoring and measuring operational risk that is subject to external review presents quite a challenge.
Euromoney March 2001
When the new Basel proposals come into force in 2004, the effects will be felt throughout the financial system. Corporate and sovereign borrowers should see their borrowing costs increase or decrease as a result of the change in bank asset weightings.
Euromoney March 2001
The news coming out of Japan has for a long time been wholly discouraging. Its economy has been on the operating table for the best part of 10 years. The government, unsure, unable or unwilling to make use of the scalpel, resorts to placing band-aids over gaping wounds. The cauterizing effect of injecting trillions of yen into the ailing system is also wearing off. Intermittent signs of recovery often prove no more than false dawns. And the country is running out of its self-prescribed medicine. But there are going to be some winners – quite possibly the foreign investment banks. As companies take it on themselves to restructure, or are forced to, those familiar vultures are circling overhead.
Euromoney March 2001
A joint venture that can only be described as a success, Nikko Salomon Smith Barney is a rare creature, and other banks in Japan are green with envy.
Euromoney March 2001
CSFB hopes "to get the orthodox, corporate listed exchangeable bond structure working in Japan", but certain obstacles are making this and other sophisticated equity capital markets techniques difficult to establish.
Euromoney March 2001
The Portuguese bond market is caught in a pincer grip. More liquidity is required to attract foreign investors but that can only be achieved if the trend for domestic investors to move to other euro markets is at least partly reversed. Some success in improving the situation has been achieved but there is much still to be done.
Euromoney March 2001
The last round of deal-making in Portugal’s banking sector has now come to a halt. Another round of consolidation may follow, as the newly-merged banks continue to eye each other.
Euromoney March 2001
Portugal’s economy is in great shape, unemployment is low by European standards and government borrowing requirements are steadily falling. That is the good news. Less auspicious is the fact that Portugal is saddled with structural imbalances and competitiveness vis-à-vis other economies with relatively low labour costs is steadily deteriorating.
Euromoney March 2001
For the first time in almost a decade Latin America’s faithful companion – a strong US economy – will be absent this year. It’s an eventuality that the finance ministers and central bank governors of Latin America have been worrying about for years. They have fretted over how their economies will respond to reduced demand from American importers and how their finances might be disrupted by collapsing confidence and increased risk-aversion in the US. Yet with America’s astonishing growth finally appearing to falter, private-sector capital has flowed abundantly since the start of 2001. Perhaps investors into the region are just taking a short-term view on US interest rates. Political risks remain the medium-term worry.
Euromoney March 2001
Brazil’s economy is growing fast, government spending is under control and foreign direct investment is flooding in. Despite all this, crucial structural problems persist. Capital markets are weak and underdeveloped, with an insignificant amount of corporate bond issuance and a semi-dormant stock exchange. In the wider economy, vestiges of policies of import substitution and economic isolationism hamper export growth.
Euromoney March 2001
Brazil's Novo Mercado is Bovespa’s latest attempt to bring the country's Brazilian equity markets up to western standards of transparency, liquidity and governance. It is modelled on Germany’s Neuer Markt, but so far hasn’t had any listings.
Euromoney March 2001
Argentina is now number eight in a quarter-trillion dollar stream of rescue packages to bolster the credit of threatened emerging economies. Mexico was the first in 1995, recipient of what was supposed to be a one-time $50 billion ransom for world stability. But that failed to factor in the next round of play. Instead, crises have impacted more often and with greater force and will continue to do so as past example teaches the markets that speculation is protected by a G7 guarantee.
Adam Lerrick proposes that the private sector should provide the first line of defence with standby financing subsidized by the IMF as a global public good
Euromoney March 2001
In the past Euromoney’s country risk ratings have been reliable lead indicators of dips and surges in the world’s economic cycle. Six months ago the global economy looked in fine fettle, underpinned by favourable commodity prices and strong growth in developed countries. Financial markets are fearful this is about to change. Analysts’ forecasts for economic performance are noticeably lower than in September’s survey. But it’s not all doom and gloom. Research by Damon Ivanics and Andrew Newby
Euromoney March 2001
All the online bond trading platforms that are likely to emerge have already been announced. That already seems to be too many. One merger has already taken place and others will probably follow soon.
Euromoney March 2001
The new Bondbook trading platform, which was designed with ease of use in mind, is more of a fixed-income initiative than a technological one.
Euromoney March 2001
In the internet bond trading arena the present number of competing platforms is unsustainable. The consolidation process started last month with the coming together of Market Axess and Trading Edge.
Euromoney March 2001
Prescient, a pioneer of direct debt issuance over the internet, intends to expand into other products in the coming months, with the next target being certificates of deposits in the US.
Euromoney March 2001
Accounting for some 90% of dealer-to-customer trading in US government securities, TradeWeb is the most successful internet bond dealership yet established.
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Issuer: Ballarpur Industries
Amount: Rs1.5 billion
Launched: February 2001
Lead manager: DSP Merrill Lynch
Euromoney March 2001
Despite investor demands for tighter dot
com management controls, B2B and B2C
companies still have little awareness of their
exposure to legal risk By Nigel Page
Euromoney March 2001
Co-head of global debt primary markets, Nomura
Euromoney March 2001
Global head of primary capital markets, Barclays Capital
Euromoney March 2001
Head of investment banking for Merrill Lynch Europe, Middle East & Africa