March 2007
| Euromoney March 2007 The huge growth in products and sophistication in global credit markets
has been a boon for almost all participants – with one notable exception.
Monoline insurers are contemplating a bleak future in the face of changing
issuer and investor attitudes towards credit risk. Even their great hope – a
return of risk with a turn of the credit cycle – might not be enough to save
some of them. Louise Bowman reports. - Online extra: How banks are muscling in on the monolines’ infrastructure business
“Normally, the willingness of the monolines to go long-term means that they are cheaper for long-term funding. But the banks have been pushing the envelope on tenors and prices so this is simply not the case any more”
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Euromoney March 2007
The region’s rapid growth is changing the investment banking landscape beyond recognition as the fee pool grows. How are the major international firms tackling the opportunities, and which new products are creating the biggest buzz?
Euromoney March 2007
Brazil’s investment banks have always been strong competitors in their home market. Now, as the country’s corporates flex their muscles on the global stage, Lawrence White reports on whether banks such as Itaú and Votorantim see themselves as international contenders.
Euromoney March 2007
Latin America’s best companies, like its capital markets, are beginning to find their bite. Boldness is the buzzword in a stable environment of 5% regional economic growth. For a growing club, foreign markets are the targets for
home-grown Latin success stories. Leticia Lozano reports.
Euromoney March 2007
Brazil specifically – not Latin America – is one of ABN Amro’s four core markets. And there’s every indication that the Dutch bank intends to keep things that way. Felix Salmon reports
Euromoney March 2007
As Latin America’s local markets develop strongly, banks are still figuring how best to cover them. Should they buy a target, grow organically or even consider a local tie-up? And which markets should they be present in? Sudip Roy reports.
Euromoney March 2007
The growth in volumes may be higher across the region, but a NYSE listing still has big advantages for the right companies at the right stage of their development. Felix Salmon reports.
Euromoney March 2007
The Argentine local investment bank says it wants to become the region’s number one. It’s a bold aspiration for a firm in a country still recovering from crisis. Lawrence White visits Buenos Aires to find out how the bank plans to do it.
Euromoney March 2007
With acquisition opportunities elsewhere in Latin America now few and far between, global banks are increasingly turning their attention to the economically vibrant and rapidly integrating central American region. Leticia Lozano reports.
Euromoney March 2007
Little more than a year ago Commerzbank was the sick man of European finance, seemingly destined to a lonely, perhaps terminal, decline. Now insiders say the surprise acquisition of Eurohypo has given the merged firm, and its investment bank, a new lease of life. Philip Moore reports on the patient’s progress.
Euromoney March 2007
M&A, privatizations and the emergence of a new group of investors have helped boost interest and liquidity in the Portuguese equity market. This is tempting some companies to raise capital on the stock exchange. However, some of the biggest potential deals from the government could go elsewhere. Peter Koh reports from Lisbon.
Euromoney March 2007
Turkey’s open-door approach to foreign investment is paying dividends, with international banks helping to boost balance sheets and widen the range of products and services in the sector. Guy Norton reports from Istanbul.
Euromoney March 2007
URBANE, INTELLIGENT, DYNAMIC and ambitious are just some of the qualities that characterize the up-and-coming generation of Turkish bankers who are driving the country’s banking sector towards a brighter, more prosperous future with all the power of the high-performance sports cars that adorn the car parks of the banking district in downtown Istanbul.
Euromoney March 2007
Event risk remains the biggest threat to the world’s economic prospects. But globalization means that, although economic imbalances might persist, the likelihood of a major worldwide correction is low.
Euromoney March 2007
Structured product providers aim to be all things to all people: risk reducers, alpha generators, beta replicators – you name the risk and return profile wanted and they will match it. However, some institutional investors remain distinctly wary of what is on offer.
Euromoney March 2007
Barclays has announced the appointment of Matt Barrett as head of distressed debt and special situations investing. He is joined by two more new hires to work as managing directors in the same department, as Barclays looks to substantially increase its power in this market.
Euromoney March 2007
The Bank of England is planning to issue non-sterling medium-term debt to finance its foreign exchange reserves on an annual basis. The bank has mandated Barclays Capital, Citi, Goldman Sachs and JPMorgan for the syndication. The first deal is likely to take place in the week of March 12: the Bank of England said, it will be a three-year US dollar transaction.
Euromoney March 2007
Is this the start of a new funding route for corporates?
Euromoney March 2007
The shift in the balance of power in Citi’s debt group duplicates a trend seen in some other US investment banks.
Euromoney March 2007
A lack of comfort with the new product, and muted risk appetite for the asset class, resulted in thin market conditions for the newly launched ABX tranches – called TABX. The thunder of the much-anticipated start to TABX was stolen by the dramatic price falls in the ABX. Although the pace of innovation in the synthetic ABS sector has been nothing short of breathtaking – in a little over a year the market has developed indices, single-name CDS and now tranches – the latest innovation comes at a time when dealers’ view of the technology is far from clear-cut.
Euromoney March 2007
Eurostat’s ruling that healthcare securitizations will be treated as on-balance-sheet debt has forced the Tesoro to concede that the country’s constitution actually prohibits them.
Euromoney March 2007
Cairn Capital is on the road marketing the first managed constant proportion debt obligation. The deal, which is structured by JPMorgan, seeks to offer investors an improvement on static CPDOs and is proof of the rapid evolution in the product.
Euromoney March 2007
Moody’s announced in February its intention to start publishing pre-sales reports for the faltering US sub-prime RMBS market. These reports will include opinions on the expected cumulative losses and key structural considerations, as well as a transaction’s provisional rating.
Euromoney March 2007
ABN Amro launched the third SME loan securitization under its Smile programme.
Euromoney March 2007
Citi has carved out a non-mortgage-related ABS business line called global securitized products.
Euromoney March 2007
Brad Craighead is returning to JPMorgan to run asset-backed origination in Europe. He will report to Oldrich Masek, head of the European securitization product group at the US bank, and will be responsible for the bank’s relationships with issuers.
Euromoney March 2007
Last year’s rush by UK pension funds to de-risk, either via interest rate and inflation swap overlays or by switches out of equities and into fixed income, was headline-grabbing. Yield curves remain inverted but the headlines have gone. Roger James finds out why.
Euromoney March 2007
Ruling on compensation to pension scheme members for failure or underfunding will have implications for regulation and bond markets across the EU, starting with the UK, writes Roger James.
Euromoney March 2007
The NFA has barred Tradex permanently from membership, triggering spectacular bad-mouthing between former colleagues.
Euromoney March 2007
Once the ugly duckling of the FX market, the retail segment is now seen as offering rich pickings from those who position themselves correctly.
Euromoney March 2007
Status boosted by the February decisions of EBS to list it on its screens and of Euroclear to accept it as a settlement currency.
Euromoney March 2007
Many participants in the foreign exchange market were shocked by the sudden departure of nascent trading platform FXMarketSpace’s chief operating officer, Bryan Hunter, on February 12. His exit came just days after he had helped present details of FXMarketSpace to the European Central Bank in Frankfurt with his long-time colleague Rick Sears.
Euromoney March 2007
The search for yield has resulted in an increase in overseas investment. But according to a recent research note put out by State Street Global Advisors, fund managers might have been lulled into a false sense of security by the low volatility environment.
Euromoney March 2007
Nick Munns, David Frist and Chris Morrison are all believed to have left JPMorgan’s foreign exchange proprietary trading desk in London.
Euromoney March 2007
Citi has unveiled the management structure of its recently created fixed income, currencies and commodities (FICC) business unit.
Euromoney March 2007
Use is increasing across the securities industry.
Euromoney March 2007
Posit Now is the latest newcomer to European equities trading venues.
Euromoney March 2007
A shift of depositary receipt issuance to London comes at a time of soaring interest in the asset class in the US.
Euromoney March 2007
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Euromoney March 2007
Merrill Lynch has appointed John Crompton as managing director and head of equity capital markets for Europe, the Middle East and Africa (EMEA).
Euromoney March 2007
The SEC has launched a probe into allegations that Wall Street firms might be tipping off certain customers, namely hedge funds, before large trades are made by mutual funds, a practice often referred to as "front-running".
Euromoney March 2007
An increasing number of funds of hedge funds are issuing collateralized fund obligations. There have been 20 such transactions, 10 of which were launched in 2006. "We expect the number of CFO transactions in 2007 to surpass that of 2006," says Ken Margolis, co-head of global CDOs at Merrill Lynch.
Euromoney March 2007
Kotak Mahindra, one of India’s largest financial groups, is launching a fund in the first quarter of this year that offers global institutional investors the possibility of receiving returns above the domestic stock market in a private equity-type offering.
Euromoney March 2007
A survey by Absolute Return magazine indicates that US hedge fund launches slowed in 2006 – the second year of slowdown in a row.
Euromoney March 2007
Should prime brokers be supervising their hedge fund clients? Yes appears to be the message sent out by New York bankruptcy court judge Burton Lifland.
Euromoney March 2007
"The company could run very well without me" -Jim Simons, founder of Renaissance Technologies
Euromoney March 2007
According to lawyers, the Singapore Stock Exchange has issued an RFP for an adviser to rethink its efforts to attract hedge fund listings.
Euromoney March 2007
Military government described as inept, while foreign business wobbles.
Euromoney March 2007
Row brews over sale of Japanese steel maker.
Euromoney March 2007
Aeon Credit Service, a credit card issuer, became the first Japanese company to tap into the growing market for Shariah-compliant debt when it began issuing under an agreement signed with joint lead arrangers, managers and bookrunners Aseambankers Malaysia, Bank of Tokyo-Mitsubishi UFJ and CIMB Investment Bank.
Euromoney March 2007
Investment bankers have been described as masters of the universe before. Now, according to CLSA, they are getting the chance to prove it.
Euromoney March 2007
Vietnam’s reforming bank market is learning the lessons of its northern cousin. Foreign banks are lining up to pour money into local banks, hungry for a position in what will be a lucrative, if crowded, domestic market.
Euromoney March 2007
In the month after populist leftist Rafael Correa took power in January, the market in Ecuador’s global bonds went crazy. Correa made noises about defaulting on Ecuador’s debt from the beginning of his presidential campaign, but bond traders generally discounted that rhetoric as political posturing, and Ecuador’s benchmark 2030 global bonds remained near par until after the inauguration.
Euromoney March 2007
One of Latin America’s most distinguished banking careers will come to an end this month. Eloy Garcia, treasurer at the Inter-American Development Bank, will leave the multilateral after its annual meeting in Guatemala at the end of March after 35 years’ service.
Euromoney March 2007
"We lost more money than any other bank during the crisis because of our high profile, and if we speak to the media again at this time we could suffer again. We have worked hard to achieve a lower profile in the press."
Euromoney March 2007
Willy Zapata, Guatemala’s head of banking supervision, is not easily shaken. When Euromoney met him late in the evening recently, his offices were under siege from angry depositors in the second bank to collapse in as many months. Armed guards barred the gates.
Euromoney March 2007
Foreign investors are starting to return to Argentina’s capital markets just five years after the country’s severe economic crisis. However, their confidence has been shaken following the government’s apparent manipulation of the inflation rate for January.
Euromoney March 2007
As is the fate of most technologies, algorithmic trading is spreading from the developed markets to the developing. Mexican broker-dealer Finamex is the latest to catch the bug, announcing on February 20 that it had chosen US-based Progress Software’s Apama platform to offer algorithmic trading to its buy-side customers.
Euromoney March 2007
Venezuela’s president, Hugo Chávez, has signed a deal with London mayor Ken Livingstone to supply the UK’s capital with cheap oil to help run the city’s buses.
Euromoney March 2007
Dan Zelikow has joined the Inter-American Development Bank as its new chief operating officer.
Euromoney March 2007
Colombia’s president, Alvaro Uribe, has appointed Oscar Ivan Zuluaga as his new finance minister following the resignation of Alberto Carrasquilla.
Euromoney March 2007
Brazil’s investment banks have always been strong competitors in their home market. Now, as the country’s corporates flex their muscles on the global stage, Lawrence White reports on whether banks such as Itaú and Votorantim see themselves as international contenders.
Euromoney March 2007
Row with Russia leaves large hole in the country’s current account.
Euromoney March 2007
The temperature in Moscow has plummeted to well below freezing in recent weeks but the battle to land the best available investment banking talent is raging white hot as firms snap up experienced personnel whom – they hope at least – will boost their share in one of the world’s most lucrative markets.
Euromoney March 2007
International media coverage of the late-January elections in Serbia tended to lead on the fact that the ultra-nationalist Radical Party – headed by Vojislav Seselj who has been indicted by the international tribunal in The Hague – won the most votes in the poll. However, the more important and more comforting fact is that a coalition from what is known as the democratic bloc of parties will ultimately form the new government in the Balkan republic.
Euromoney March 2007
Rated sovereigns in the Middle East and Africa are expected to show net borrowing decreases in 2007 because of large debt repayments, according to Standard & Poor’s.
Euromoney March 2007
Egyptian telecoms group Weather Investments continues its penetration of European markets following the acquisition last month of Greek rival TIM Hellas. The deal comes 18 months after the company, which is 97% owned by Naguib Sawiris, bought Italy’s Wind, which was the largest acquisition in Europe by a Middle East concern.
Euromoney March 2007
Central and eastern Europe used to be notorious for pollution-belching power stations and factories but the region could now be a key player in the fight against climate change through the use of renewable energy sources. That’s certainly the hope of Michael White, managing partner of EnerCap Capital Partners, whose EnerCap Power Fund is seeking to raise €100 million to invest in renewable energy projects.
Euromoney March 2007
Sberbank, Russia’s largest savings bank, launched an $8.8 billion equity issue last month.
Euromoney March 2007
Credit Suisse has promoted Ram Nayak and Darren Walker to head its emerging markets group within its fixed income division in London.
Euromoney March 2007
Euromoney March 2007
Market expectations of interest rate stability fly in the face of growing signs of inflationary pressure and the likelihood of a move by the Federal Reserve.
Euromoney March 2007
We are repeatedly told that financial markets are awash with liquidity. That is now less true and the ingenuity of modern finance means that liquidity is little more than a mirage.
Euromoney March 2007
Blackstone used a rapid-fire trading-style approach in its recent record-breaking LBO. But can we expect disasters
comparable to those of the early 1990s?
Euromoney March 2007
It’s best for
investors to
be cautious
and not leap
aboard a fad
bandwagon.
Euromoney March 2007
Some dealers
have already
suffered from
the widening of
spreads on the
ABX index. Will
the problems
spread?
Euromoney March 2007
It might be
cause for
concern
rather than
enthusiasm
when a hedge
fund goes for
a stock market
listing.
Euromoney March 2007
In their rush to
capitalize on
infrastructure
privatizations,
lenders are
pushing their
risk criteria to
the limit.
Euromoney March 2007
Sberbank
rights issue
leaves the
market dazed
and confused.
Euromoney March 2007
Euromoney March 2007
Euromoney March 2007
Euromoney March 2007
Euromoney March 2007
Sarah: "I would just like to check some figures with you, if that’s ok?"
Allan: "Figures, I bet you’ve got a lovely figure"
Euromoney March 2007
Your average banker’s insatiable thirst for blood is one of the main reasons for the spectacular growth of financial markets in recent years. Now complementary industries are cashing in on this wolf-like appetite for the flesh of the departed.
Euromoney March 2007
Peter Epstein has worked out what the hedge fund manager has missing in his/her life.
Euromoney March 2007
Recent visitors to BNP Paribas’ London headquarters have been greeted by placards in the entrance hall that urge staff to "Be smart".
Euromoney March 2007
The final outcome of a much-rumoured rebranding exercise was not much of a surprise.