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April 2008

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  • Credit Suisse and Gulf Capital, one of the region’s biggest private equity firms, have announced an agreement in principle to launch a strategic alliance focused on investing in the Gulf and Middle Eastern economies. Karim El Solh, chief executive at Gulf Capital, says: "Of particular help to us will be Credit Suisse’s expertise in leveraged buyouts, its global footprint, its financial strength and award-winning debt and equity franchises in the Middle East."
  • Local-currency debt markets in emerging economies are beginning to suffer from the credit crisis and broader global slowdown.
  • Measures to boost the competitiveness of Brazil’s exporters might well be fruitless.
  • Much is made of Ben Bernanke’s academic work on the Great Depression. However, the Fed chairman seems to making policy with one eye on the recent Japanese debt deflation cycle.
  • There are signs that Venezuela is moving away from the plummeting dollar for some of its oil contracts. Energy minister Rafael Ramírez said last month that his country would insist on payments in euros on some contracts. Ramírez declined to give further details, although the move is bound to further damage relations with the US government. Venezuelan president Hugo Chávez has been critical of the Bush administration’s economic policy, blaming it for the dollar’s slump. He wants Opec members to move from pricing oil in dollars to a basket of currencies.
  • The Dubai Multi Commodity Centre Authority, which is owned by the Dubai government, is buying a 4.99% stake in Shariah Capital. The two companies are also creating a joint-venture investment company that will develop Shariah-compliant commodity-linked investment products.
  • Moody’s Investors Service has assigned a Baa1 country ceiling for long-term foreign currency debt and Ba2 issuer ratings for the Republic of Montenegro. All ratings carry a stable outlook. "Montenegro’s ratings reflect the new country’s growing integration with the European Union and the financial stability afforded by the use of the euro as the official currency," says Kenneth Orchard, a Moody’s senior analyst. "Among Montenegro’s main rating constraints are its lack of administrative capacity and relatively underdeveloped judicial institutions."
  • If Japan’s property bubble has already expanded and popped, China’s might be close to bursting.
  • "It is very hard to distinguish a catastrophe CDO from any other type of CDO in this market – aren’t all CDOs catastrophes?"
  • "I’ve reluctantly discarded the notion of my continuing to manage the portfolio after my death – abandoning my hope to give new meaning to the term ‘thinking outside the box’"
  • Unless Japan gets more involved in international capital markets, perhaps through a sovereign wealth fund, it is likely to become increasingly irrelevant in Asian finance.
  • Banco Santander in Brazil has named Banco Real chairman Fabio Barbosa as the new head of the Spanish bank’s businesses in Brazil. Barbosa will take up this new role when Banco Real is legally separated from ABN Amro. Gabriel Jaramillo, the current country head of Santander in Brazil, will "provide advice and support to the office of the chairman of Santander". Jaramillo’s post will be filled temporarily by Jose Paiva until Barbosa takes over the combined operations.
  • While investment bankers in the west expect a difficult 2008, counterparts in Asia cite the successful closing of buyouts, bond issuances and IPOs during the market turmoil as proof of the region’s opportunities. Lawrence White reports.
  • Its strength in emerging markets makes it a serious player in FX.
  • Brazil’s Banco Itaú plans to open a Tokyo branch of its securities subsidiary, Itaú Securities, in the autumn. The subsidiary will become the first securities firm from the Bric countries (Brazil, Russia, India, China) to set up an operating base in Japan. The new branch will sell Brazilian stocks, bonds and other financial products to institutional investors.
  • Since it launched its FXTrade platform in 2001, Oanda has carved out a reputation as an iconoclast and innovator in the foreign exchange industry. By making use of smart risk management tools, it has helped pioneer the delivery of tight spreads initially to retail customers but increasingly to institutions.
  • Foreign exchange settlement system CLS has established a new record for the value of transactions processed in one day, soaring through the $10 trillion ceiling.
  • Deutsche Bank’s global head of equity and derivatives trading, Noreddine Sebti, is packing his bags and ditching the Big Apple for Hong Kong, in a move that the bank says reflects Deutsche’s increasing focus on the Asia-Pacific region, which it expects to overtake Europe in terms of equity trading this year.
  • Dimitri Psyllidis, co-head of EMEA FICC at Merrill Lynch has left the firm. David Gu was announced as sole head of EMEA FICC.
  • Despite widespread investor puts of pre-crunch extendible notes, the sector is experiencing a relatively good 2008, with investors calling the shots.
  • Chatting with Ajith Cabraal, the amiable governor of the Central Bank of Sri Lanka, in his lofty eyrie above Colombo, one could be forgiven for thinking that he’s presiding over some approximation of a Switzerland-sur-tropique. Although his Indian Ocean homeland is besieged by a civil war escalated by an ambitious president with an advancing personality cult, "things aren’t nearly as bad as they might appear on CNN," Cabraal says.
  • Market participants say that the borrowing binge by Russian banks and corporates in recent years could come back to haunt them, given the much tighter credit market conditions in 2008.
  • All market participants must still confront the reality of near total market failure across the debt and money markets, an inability to sell even quality assets for cash or to borrow against them and a complete loss of faith between financial institutions. More public money is surely coming, but how can it repair this?
  • Alternative investments round up: Who’s smiling?
  • The covered bond market has not behaved in the way investors had been led to believe it would. It’s time to realize that covered bonds are not the golden child of the bond family.
  • Some of Argentina’s biggest companies are raising finance to invest in the booming agriculture sector in Latin America, on the back of steep rises in soft commodity prices.
  • Lost a billion dollars in the US structured finance market? No problem: Daddy just received a huge bonus from the global economy and will give you $1 billion to cover the damage.
  • ECBC plenary meeting divided about how to handle market making.
  • Any product that combines the words “catastrophe” and “securitization” is going to be a tough sell in this market. But insurance-linked securities are a rare sector of spread stability and growth in the credit world. Louise Bowman reports.
  • Spanish bank BBVA has announced plans to open a new platform in Brazil, following the sale of its 5.01% stake in Banco Bradesco.