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February 2003

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LATEST ARTICLES

  • Sovereign borrowers
  • General Hilmi Ozkok, Turkey's army chief of staff, last month expressed his displeasure at prime minister Abdullah Gul's interference in army policy towards Islamist officers. In a speech he made at the military's annual party for the media (Islamist journalists are not invited) Ozkok said Gul's attitude would "indubitably encourage those who got mixed up in recidivist [meaning Islamic fundamentalist] activities".
  • The AKP’s hefty majority in Turkey’s November elections looked promising but indecision has taken a hold on the new government, not least in its commitment to the discipline required by the IMF.
  • Many of the futures commission merchants favour a model for the US futures business that is suspiciously similar to that employed in the US options market. It's a model, conversely, that the futures exchanges are keen to avoid, as they have seen what effect it has had on the Chicago Board Options Exchange.
  • Fund management
  • The word from Paris is that BNP Paribas chairman and CEO Michel Pébéreau is more than a little distracted from his favourite pastime of reading science-fiction novels.
  • Romania's publicity-friendly tourism minister, Dan Matei Agathon, is looking to give a lift to investment in the state-sponsored Dracula Park - a tourist trap inspired by the vampire. He plans to start trading Dracula Park shares on the Rasdaq exchange this month.
  • Cades, the state-backed agency set up to pay off France's social security debt, has sizeable yearly funding needs and prides itself on the quality and regularity of the information it provides to the market.
  • For years companies leveraged up to boost shareholder returns. When the boom burst the disappointment of stockholders was as nothing to the wrath of creditors who have pushed companies to the brink. Some have pulled back, others are still teetering, only a few have steered well clear of trouble.
  • Stock markets started 2003 in a relatively buoyant mood. The view seemed to be that the world economy would come out of a soft patch, that the Bush administration would deliver tax cuts that sustained US consumer spending and that war in Iraq would go smoothly and quickly, slashing oil prices.
  • Sovereign borrowers
  • As investors cut back on corporate exposure, high-quality issuers are scooping up funding. Smaller ones can satisfy their needs with many bite-size deals rather than a few jumbos.
  • Sovereign borrowers
  • Lang Kwai Fong - the area in Hong Kong where you go to drink before you hit the really seedy bars - used to be a good gauge of how happy and confident expatriates were. According to an Australian banker, in the 1990s it was busy during the good times and quiet during the bad. These days, though, expats have changed their drinking habits.
  • Fixed income
  • Foreign exchange
  • Sovereign borrowers
  • Japan
  • The gold price has risen spectacularly in the past year but it is not clear that this buoyancy can be maintained, particularly as investment demand has far exceeded any increase in purchases by manufacturers.
  • The European Investment Bank (EIB) has achieved a breadth of funding sources that few borrowers can rival. It is the only supranational issuer with benchmark programmes in three currencies - euros, dollars and sterling - and it is also the largest non-resident borrower in central and eastern Europe. Rene Karsenti, EIB's director general of finance, says: "We have a strategic presence in the accession states as we lend in these countries. It's also important to contribute to the development of these local bond markets in the run-up to EU accession, as we did with Portugal, Greece and Spain before their own accession."
  • Ukraine
  • Middle East
  • Some points to consider before you dabble in the yellow metal.
  • Despite the continuing weakness of equity markets, institutional investment in hedge funds has grown only slowly.
  • Managed futures, a strategy used by commodity trading advisers, produced the highest returns of any strategy in the CSFB/Tremont group of indices in 2002. By betting on increases in the prices of gold and oil, and on the depreciation of the dollar, commodity trading advisers produced returns of 18.33%.
  • Amid the corporate credit meltdowns of recent months even the most highly rated of frequent issuers have been forced to defend their funding strategies and the composition of their balance sheets. GE Capital is a prime example. The financial services company has always been proud of its triple-A rating but it has been less keen in the past to demonstrate to the market and the rating agencies why it should still hang on to it.
  • The days of large foreign investment flows to Latin America appear to be over. Companies and countries in the region are therefore going to have to find new ways to achieve sustainable growth.
  • Executives at the Chicago Mercantile Exchange have pulled off what could turn out to be the most important coup in the institution's recent history. It's not the launch of their IPO in December, although that must count as a great success in itself given both the sheer effort of transforming from a mutual to a public company as well as going public in the toughest new issue market for decades.
  • Issuer: Tyco InternationalSize: $.4.5 billion 144a convertible bondBookrunners: Morgan Stanley, Banc of America Securities, Citigroup
  • India inched its way closer towards full convertibility of the rupee early last month when finance minister Jaswant Singh unshackled foreign investment by Indian companies, mutual funds and investors. However, the fine print shows that the old control mindset of the Indian authorities has not changed.