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February 2003

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  • Perhaps he'd had a bad night's sleep. Perhaps it was a slip of the tongue. Or perhaps the man who told us last June that we needed to buck up our standards in the wake of the corporate crises in the US simply wanted to tell the truth.
  • Ukraine
  • 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.
  • In his first two months in the job, Bernie Dan, chief executive of the Chicago Board of Trade, has made two quick and bold decisions. It was the second that got the most publicity: the announcement to dump the exchange's joint venture with Eurex in favour of using the Liffe Connect trading platform.
  • 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".
  • Sovereign borrowers
  • 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.
  • 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.
  • 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.
  • 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.
  • 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.
  • Sovereign borrowers
  • Sovereign borrowers
  • 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%.
  • Japan
  • Sovereign borrowers
  • South Korea
  • Fund management
  • The IMF has come under heavy fire for its decision last month to roll over $6 billion it lent to Argentina. The republic has failed to implement or even promise any of the reforms the IMF considers necessary, say critics, and the Fund has lost credibility by caving in to the Argentines' blackmail tactics.
  • Just which place could Sir David Walker have been talking about when he described a country as "Wogga Wogga"?
  • Sovereign borrowers
  • Foreign exchange
  • 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.
  • 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.
  • Investment banking
  • Sovereign borrowers
  • Middle East
  • Maarten Henderson, CFO of Dutch telco KPN, ended 2002 on a high note. On December 5, Standard & Poor's upgraded the company from BBB- to BBB, praising its deleveraging efforts. It had cut net debt from e22 billion at the end of September 2001 to e13.9 billion in just a year and had improved operational performance. By December 30, Henderson was celebrating the birth of a new baby daughter. And 2003 also got off to a promising start when, at a time when Deutsche Telekom was being punished by a two-notch downgrade by Moody's in January, the rating agency changed the outlook on the KPN's Baa3 rating to positive.
  • Bear markets breed their own types of deals - balance sheet repair, restructuring, liability management, monetization of illiquid assets, securitization, opportunistic acquisitions. The pace and intensity of such deals may vary between the long hard slog and sudden bursts of activity, but companies and bankers that do well in them tend to share certain characteristics: a refusal to accept defeat, creativity that may be inspired by desperation, and a determination to deal with complexity and hold their nerve. Banks must sometimes underwrite risks they would rather not take, just to complete deals.
  • M&A