The covered bond market is developing in a way that few could have hoped for a few years back. Everywhere there is evidence of vitality. In addition to established relatively new sectors such as Ireland and the UK, issuers from Portugal, Italy, the Netherlands, Norway, Sweden and even Turkey are expected to join in. Alex Chambers reports.

US financier Carl Icahn’s audacious move on Korean tobacco and ginseng company KT&G has made great headlines and triggered apoplexy among Korea’s more xenophobic elements. Having amassed a combined stake of 6.72% with fellow investor Steel Partners, and pressed for a spin-off of KT&G’s ginseng division to return more capital to shareholders, Icahn has even mooted a takeover of the company. In March the Icahn camp finally won a board seat in a shareholder vote, the first time a foreign investor has been voted onto a Korean board against management wishes.

SuperDerivatives, an option pricing, trading and risk management company, has added a glossary of funky financial terms to its website.

In a sign that Kazakhstan is set to become increasingly visible on investors’ radar screens, a new investment bank has been set up there to offer a full range of corporate finance and brokerage services.

The regional real estate investment trust craze has finally sired a pan-Asian Reit, driven from Australia, and to be listed in Singapore. Despite its billing however, Allco Commercial Reit currently boasts just three assets: an office tower and shopping mall in Singapore, a stake in an office in Perth and a minority stake in an existing Australian property fund managed by the same group. That hardly qualifies for the title pan-Asian Reit but the proposed $300 million plus proceeds will certainly provide the capital to acquire more properties. The key to the success of the deal will therefore be whether investors believe the deal’s sponsor, Allco Finance Group, has the ability to find and close sufficient deals to warrant the fund’s pan-Asian billing.

The future for UniCredit and HVB’s merged operations in central and eastern Europe has been determined, with HVB’s subsidiary, Bank Austria Creditanstalt, set to become the sub-holding company for CEE operations within the UniCredit group.

More opco/propco deals are likely given rising real estate values and investor interest in secured debt.

Spanish bank forms a joint venture with alternatives specialist Vega to cater for institutional investors.

The UAE capital markets received a boost last month when National Bank of Abu Dhabi (NBAD) issued a Dh2.5 billion ($680 million) tier 2 convertible bond through a private placement. It is the first time this type of hybrid security has been issued in the UAE.

Plans by International Index Company (IIC) and Eurex to launch a CDS future have yet to resolve the question of how cash settlement will be achieved on reference entities that have defaulted. But once this problem has been solved, the initiative should open up the CDS market to investors that have so far been blocked from trading the OTC market.

There is a consensus view that European equities are cheap and that M&A will continue to drive the market up and keep the liquidity flowing. This rosy vision is built on the assumption that earnings will remain strong, that global growth is re-accelerating, that the risk from inflation is minimal and that interest rates are therefore likely to remain low.

The volume of European equity capital market deals from the real estate sector has been growing strongly over the past two years and is expected to increase again this year.

Excellent market conditions, M&A, special situations and heightened insurance activity drove record subordinated supply in the first quarter; more deals are in the pipeline.

NIBC is planning a hybrid capital deal linked to the 10-year constant maturity swap rate. The deal, via lead manager Morgan Stanley, is fixed for the first five years at a whopping 8% before switching to the 10-year CMS plus 10 basis points. The coupon is capped at 8% with no floor. Such deals were extremely popular until a year ago but hybrid capital referenced to CMS coupons has fallen out of vogue since. The sector boomed during 2004 and the first quarter of 2005, with borrowers attracted by the highly aggressive all-in after-swap funding costs. But after the curve flattened many of these securities have traded at prices in the low 80s. With the curve as flat as it is, it seems the view is that the downside is now limited.

Ed Mizuhara has left Lehman Brothers where he ran the sovereign, supranational and agency syndicate, to join Credit Suisse. He will report to John Fleming, head of syndicate, who moved fast to find a replacement for Nick Dent. Dent resigned in February to join Merrill Lynch.

WaMu for covered bonds

Chief executive of the Chicago Mercantile Exchange thinks pressure is building for exchange-traded model.

The London Stock Exchange’s shareholders clearly have a lot to gain from Nasdaq’s bid for the market, especially if, as is widely expected, the New York Stock Exchange joins in the fray and pushes up the price even further. But what, if anything, users stand to gain is far from clear.

Are hedge fund databases trustworthy...

A report from Ibbotson Associates indicates that the returns reported in hedge fund databases are often much higher than they should be because of backfill bias and survivorship bias.

It seems no one has the right returns

HK euphoria hit by rapid short circuit

Bank is making use of its wide geographical experience to build cross-border expertise.

There has been a lot of talk about the use of computerized trading in foreign exchange. Discussions at a recent seminar in London suggest that there is real substance, not just hot air, behind the chat.

Rising personal bankruptcy levels and an uncertain economic outlook in the UK might suggest that non-conforming and sub-prime mortgage lending is not the smartest business line to jump into at the moment. Try telling that to the succession of new entrants now preparing to try their luck in this sector – one in which veterans might suggest that they are already 10 years too late.

As if investment banks didn’t compete enough with each other already, London-based employees of Barclays Capital, JPMorgan and Morgan Stanley couldn’t resist the opportunity to swap pinstripes for cricket whites in the chill of February for what has been billed the City Indoor Cricket Championship, held in Docklands.

“I see you have the same problem as in my country: prostitutes everywhere!”

“Oh, these are among the most toxic instruments we’ve created. And they’re absolutely a bull market instrument. In a bear market, it’s not a question of maybe losing just a percentage point. You can lose 10 points in a heartbeat.”

The first wave of easy returns on commodities has passed, while allocations continue to grow. Traditional players are having adapt to a much more liquid market, swimming with a new breed of investors and their active hedging strategies. Peter Koh examines the changes.

The EU’s emissions trading scheme and Kyoto’s clean development mechanism are succeeding in promoting renewable energy. But electricity utilities are turning out to be surprise beneficiaries. Peter Koh reports.

Economic pressures and government policies are driving investment inland, but many of the so-called second cities already boast powerful economies. Banks see a new frontier of opportunity. Chris Leahy reports from the cities of Chengdu, Wuhan and Qingdao.

The US hybrid market has suffered a setback following a recent NAIC ruling.

Sheikh Mohammed Al-Thani has many roles. As Qatar’s economy and commerce minister he presides over the world’s fastest-growing economy. He is also chairman of the Qatar Financial Centre and the Doha Securities Market. Al-Thani is considered one of Qatar’s most forward-looking policy-makers, a man who has great ambitions for the Gulf state. Talking to Sudip Roy in Doha, he outlines the economic progress of Qatar and argues that it will become the financial services hub for the Middle East.

Banks’ credit research departments are readying themselves for a turn in the credit cycle towards a higher level of defaults and volatility. Florian Neuhof reports on the state of play.

Treat your back-office staff well lest they take umbrage and run away to a hedge fund.

Investor demand for US commercial property-backed debt is rapidly increasing, with strong bids coming from Europe and Asia. An exciting new range of structured finance and derivatives products is on offer, but issuers and investors might be biting off more than they can chew. Kathryn Tully reports.

Finance minister’s resignation leaves investors feeling cautious.

It’s a good job that many US investment banks have had such a strong first quarter. They need the cash to keep the regulators at bay.

Bank telecom advisory fees are on the up, but that won’t last for long.

Freddie Mac’s new treasurer, Tim Bitsberger, marks a break with agency tradition in being an outsider. But he reckons his US Treasury experience can only enhance Freddie’s transparent approach to raising money and its stringent risk management standards. Bitsberger’s hope is that these will serve it well as it builds out its retained portfolio again. Kathryn Tully reports.

Vietnam’s stock market is roaring as speculative money chases the few listed stocks. Reform is on the way and the potential for growth is clear. Meanwhile, the market remains over-hyped, poorly regulated and lethal for the uninitiated. Chris Leahy reports.

Further reformis essential if the region’s stock exchanges are to come under the steadying influence of institutional investors.

There are high expectations for European public-to-private deals this year but there is much uncertainty in the sector about how many will actually make it to market

Deutsche Bank has hired from a private equity firm to expand its presence in the rapidly growing real estate, gaming and lodging sector in Asia. The bank has hired Matthew Mrozinski from Colony Capital, the private equity firm that specializes in real estate investments. There, Mrozinski was vice-president of acquisition and head of Asia-Pacific capital formation. In this newly created role at Deutsche, Mrozinski will report to the bank’s head of M&A for Asia, Douglas Morton, but will also be responsible for the financings of real estate deals.

Research shows an increase in abnormal stock trading in the UK despite recent FSA clampdown. Some of the irregular share price movements may be indicators of insider trading.

CLO facilitates the provision of loans to the world’s poorest citizens.

Dealers say the backlog of unconfirmed credit default swap trades has been reduced by 54% since September 2005. The New York Fed is asking for a further reduction by the end of June this year. How near is the market to having an infrastructure able to cope with massive growth and a broadening of the uses of CDS? Helen Avery reports.

Singapore has proposed a puzzling initiative, supposedly designed to attract more hedge fund money to the Lion City. In March, the Stock Exchange of Singapore issued a consultation paper outlining its plans to list hedge funds locally. Quite why a hedge fund would want to list on SES is not explained. What is clear is that such a move would not create extra liquidity: the suggested guidelines state that there will be no dealings in listed hedge funds. The only feasible reason to list would be for prestige. But hedge funds don’t work that way and their predilection for discretion suggests that few of them would be interested.

Investors were given a faint hope that Yukos might yet escape bankruptcy proceedings last month when Russian oil company Rosneft agreed to acquire $482 million of outstanding debt that Yukos owed to a consortium of international lenders.

The $67 billion AT&T/BellSouth merger catapults Evercore and Rohatyn up the league tables.

French chemicals company Rhodia has announced several initiatives that will help Rhodia Energy Services optimize the value of its carbon emissions receipts, which have been generated from projects to reduce emissions at Rhodia’s plants in South Korea and Brazil. In its first hedge using carbon emission receipts, it has sold 8 million tonnes of CERs, of which 6.5 million will be sold at €15 a tonne, to be spread over 2007 and 2008.

CLSA rebrands and beefs up its private equity operation.

Banking sector consolidation continues in Georgia, where Bank of Georgia recently acquired its ninth-largest competitor, IntellectBank.

After its success with the sale of BCR late last year to Erste Bank, Romania’s government seems determined to press ahead with the sale of one of the few remaining banks of any size in central Europe, CEC. The final bidding deadline for the 85% stake is April 26, with six European banks – National Bank of Greece, Monte dei Paschi di Siena, Dexia Bank, EFG Eurobank, OTP Bank and Raiffeisen Bank – having shown an interest by mid-March. The decision to go ahead with the sale surprised many bankers, given that the government had an alternative proposal to restructure the bank over two years to boost its value, with some suggesting until recently that CEC might never be sold.

Domestic criticisms of Deutsche Bank’s international focus have not passed it by, prompting plans to develop its business at home. But as Jürgen Fitschen, who leads the initiative, tells Philip Moore, his bank does not intend to imitate rivals’ indiscriminate wooing of medium-size companies.

The introduction of a covered bond law in the UK is meant to sound the death-knell of RMBS. But the traditional financing vehicle of UK mortgages still offers greater leverage, diversification and liquidity. That’s why banks such as HSBC are considering setting up both covered bond programmes and new RMBS master trusts. Louise Bowman reports.

Icelandic bank spreads, which had been drifting wider late last year, moved out sharply in early March.

Joaquim Levy, Brazil’s treasury secretary, tells Lawrence White how the sovereign is restructuring its debt management profile.

Tough regulations hold back trade volumes.

While rivals’ share prices roar ahead, Citigroup’s languishes. Investors love stocks that are easy to understand. So is it time for Citi to develop a clearer strategy?