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December 2010

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  • Neither side appears to be gaining from Sino-foreign securities joint ventures.
  • Could lower interest rates give lift-off to Brazil’s economy? And how might they be achieved?
  • The widening insider-trading probe in the US is creeping closer to systemically important financial market players, as subpoenas have been received by hedge funds SAC and Citadel and two big mutual funds: Wellington Management and Janus Capital.
  • Recent insider-trading investigations in the US and the UK have focused on bit players by financial market standards. The three hedge funds raided in the US are low-profile firms. Don Chu, the expert network official charged with channelling confidential corporate information, was described in the case against him as a New Jersey resident paid $6,000 a month by his research firm employer – peanuts to a Wall Street player.
  • Bank debt bail-ins have prompted fierce debate in the banking industry and among fund managers. Spend time in the company of a bank-funding official or an investor in bank debt and it doesn’t take long for them to get a little hot under the collar.
  • Inter-emerging markets deals are on the increase. Some global investment banks will be hard pressed to get a look-in.
  • It’s good news for bondholders and shareholders that companies are awash with cash: it’s bad news for everyone that they can find nothing better to do with it than buy back their own shares.
  • Praised for their role during the global financial crisis, Brazil’s state-owned banks now face calls to allow the private sector a larger role in lending and financing.
  • Have you ever wondered what makes a film a hit or not? Steve Jasmine, a former banker in corporate treasury and risk management at Commonwealth Bank of Australia, believes he has identified box-office hit criteria that he is hoping will aid the film finance community in better selecting their slate investments. Having spent the past three years watching and re-watching movies, Jasmine, via his new company, Causation Creation, has identified 800 criteria that go into creating a $1 billion-plus grossing movie. Star Wars scores 100% on his testing, and Gone With the Wind, Titanic, Avatar, ET, The Godfather and Grease all get 96% and above.
  • Banks’ competition to write mortgage business is putting pressure on Israel’s Green Line.
  • "Well, he is German"
  • Petrobras’s recent record-breaking fundraising, which brought in a useful $70 billion, seems in some ways symbolic of Brazil’s bright prospects. Yet the issue was also controversial, providing further evidence for those who believe the role of the state in the Brazilian economy is too large and set to increase.
  • "Someone should go away and think this through properly"
  • Issuers and underwriters are braced for more structured credit litigation.
  • Euromoney heads to a leading bank’s pre-Christmas drinks party held in a London art gallery. A large and boisterous crowd hovers over trays of drinks and canapés in the entrance hall, ignoring the rooms beyond full of striking Renaissance paintings. The air is thick with gossip, surprisingly, about contingent convertibles. The buzz is that Barclays has been sounding out the markets for a deal, that UBS and Credit Suisse are preparing to issue. The host bank, too, is apparently keen to do one. Euromoney is confused. Markets are nervous about the economies of the developed world, about banks’ exposures to troubled sovereigns, about the unintended consequences of regulation. All eyes are on Ireland and the extent of possible losses to be handed to holders of its banks’ junior debt. Bank subordinated bonds are selling off.
  • The naming of new products and trends in finance is fraught with peril, as Euromoney detailed in this column last month when describing the spat in Hong Kong over whether to name its new renminbi-denominated bonds "tigers" or "dim sum" (see Renminbi-denominated bonds: Hong Kong licks its lips for dim sum pun fun, Euromoney November 2010). And so to Euromoney’s China Global Debt Capital Markets Congress in Beijing on November 16 and 17, where visitors to HSBC’s well-attended stall could pick up a research report on the internationalization of the Chinese currency entitled The rise of the redback. The name is an obvious nod to the nickname of the US dollar but – as a wag loitering by the stand mischievously pointed out – the Redback is also an extremely venomous spider native to Australia, known for its resemblance to the even more dangerous Black Widow, with its habit of lurking in outhouses and for the female’s rather inconsiderate taste for devouring the male after mating. It is doubtful, though not impossible, that HSBC meant to imply by the comparison something about the ravenous rate at which the renminbi is consuming market share from its rivals in global trade settlement. If, as is likely, the unfortunate connotations were not intended, perhaps future economists pondering a snappy title might be encouraged – like the Australian nervously entering his outhouse at night – to check thoroughly for dangers before committing.
  • Court documents in the recent Terra Firma case against Citi have revealed that the relationship between the two parties was hardly harmonious long before the disputed telephone calls between David Wormsley and Guy Hands involving Cerberus Capital Management’s appetite or lack thereof for a bid for EMI.
  • Brazil is riding high on the economic gains of the past few years, with its membership of the elite of developing nations confirmed. But some have concerns about the direction the country will take under new president Dilma Rousseff.
  • China’s fragmented regulatory environment makes it difficult for global issuers looking to raise capital in the market, according to Kenneth Lay, outgoing vice-president and treasurer at the World Bank. Speaking to a full house at Euromoney’s China global debt capital markets congress in Beijing on November 16 and 17, Lay’s words came in response to discussion of China’s multitude of regulators by panellists in the opening ‘Leader’s conversation’.
  • Private sector spend up 12-fold; IDFC plans to triple loans
  • Collective action clauses introduced; Markets fail to take any comfort
  • Swiss finish boosts speculation; Credit Suisse, Barclays in frame
  • Regulators have sparked a new dash to raise capital; The outlook for earnings and returns is unclear
  • All Nigerian banks to benefit; Banks contribute to sinking fund
  • The Irish government has been forced to take drastic steps that will cause short-term suffering. But its approach is one that other countries might later regret not having adopted.
  • Restricts options for other distressed investment firms; Creditors approve Aref and Ayaan restructurings
  • Will the BAB programme be renewed?; California deal shows signs of relief
  • Recent share sales raise hopes of 2011 IPO bonanza; Kazakh bank debt remains risky proposition
  • Candidacy status next year; Tax and graft reforms pay dividends
  • New FIG chief William Fall is building on bank’s DCM and structuring strengths; Bank sees business opportunity arising from its own traumas