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January 2006

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  • The Tokyo Stock Exchange found that a malfunction in its new and trouble-prone trading system prevented Mizuho Securities from being able to cancel the mistaken J-Com order.
  • The bond market might have underestimated the troubled issuer’s ability to realize investment-grade ambitions.
  • Citigroup, Morgan Stanley and RBS finance the UK pub party.
  • Siegfried Jaschinski has a grand ambition for Landesbank Baden-Württemberg to be a regional, if not a national, champion of wholesale banking in Germany. A year after he became the bank’s chairman, Philip Moore spoke to Jaschinski about the realistic prospects of a self-proclaimed house bank.
  • Innovation and wider investor participation continue apace.
  • Investment banks Nomura and Mediobanca are about to close Italy’s largest ever securitization of regional healthcare receivables, according to market sources in Italy and London. “This is the largest ever deal of its type, and it has unique structural features that have never been used before in this asset class,” says a source close to the €2 billion transaction.
  • The Czech Republic’s PPF Group, which owns Home Credit and insurer Ceska Pojistovna, has managed to achieve top three positions in all of its countries of operation and with limited need for international financing. Now, the previously inwardly focused group has finally begun to let outsiders in. Kathryn Wells reports.
  • Many of the most attractive banking assets in emerging Europe have already been bought. Acquirers must look further east for their next target. But investment bankers are already thinking of the next big play – a global bank trying to buy a presence across the region. Sudip Roy reports.
  • Hedge funds are main drivers into insurance underwriting. An increasing number of hedge funds and private investors are looking to the insurance markets as a source of attractive returns and diversification.
  • Hybrids will drive investment-grade issuance this year. The emergence in mid-December of Burlington Northern’s $500 million hybrid debt transaction via Merrill Lynch and Goldman Sachs indicated that the first US corporate hybrid, issued by Stanley Works the previous month, was not a one-off.
  • Australian lender ANZ became the latest foreign bank to invest in a mainland Chinese lender in December 2005 when it agreed to invest $120 million for a 19.9% stake in Tianjin City Commercial Bank. TCCB, based in Tianjin, is China’s fourth-largest city commercial bank by assets, which totalled $8 billion as at October 2005. The bank serves 5 million customers from 180 branches and offices. ANZ plans to provide TCCB with access to its intellectual property and technical resources, specifically to build risk management, retail banking and trade finance capabilities. ANZ has clearly considered its investment in TCCB carefully: Tianjin was voted “most livable city in China” according to an international survey and it is twinned with Melbourne, ANZ’s home city.
  • Loss of guidance note 5 wording boosts shareholder leverage.
  • After months of complaints from debt syndicate managers, UK regulator the Financial Standards Authority has responded to their complaints about the Market Abuse Directive’s stipulation that supposedly stopped new issues being over-allocated by more than 5%.The requirement, which originally targeted mispriced equity issues in southern Europe, was limiting the ability of lead managers to control aftermarket performance, particularly on volatile credits. The FSA has now said it was feasible for firms to document their reasons for over-allocating beyond the 5% but that such action would not be automatically regarded as market abuse by the regulator.
  • The departure of BNP Paribas’ head of corporate debt capital markets, Brian Lazell, was a real shock. It is highly unusual for bankers to leave their jobs just weeks before bonuses are paid. But it is clear from insiders that Lazell has another job that he is due to take up early in the New Year.
  • Technicals will turn negative and valuations widen this quarter.
  • Last month’s cover story received a lot of feedback. It seems sell side is in a state of flux and running scared of algorithmic trading.
  • Acceptance as asset class and Ucits III mean new retail currency funds.
  • Most analysts got it wrong in 2005, who says they’ll get it right this time?
  • Investors seem to like Mexico’s new investment fund, Impulsora del Desarrollo Económico de America Latina (Ideal), owned by the country’s richest man, Carlos Slim.
  • Last year was tumultuous for Ecuador. A president was ousted, a spat with the World Bank threatened to get out of hand and there were genuine fears that the sovereign might default. At long last, though, there are signs that Ecuador might be on the path to recovery, not least because of the strong support that the sovereign received for its first bond issue in six years.
  • Latin American banks have come a long way since the financial crises of the 1990s and ordinary citizens are bringing their savings out from under their mattresses like never before.
  • Corporate hybrid has moved beyond investment grade. The development is significant for the leveraged finance community – it’s one thing persuading buyers to invest in the subordinated debt of an investment-grade company, but finding investors receptive to one from a BB/Ba2 credit is quite another. Hedge funds and certain other institutional investors were reluctant to get involved. Yet German tourism and shipping company Tui was able to raise €300 million of perpetual (non-call seven) debt rated B+/B1 via Citigroup, Deutsche Bank, HVB and RBS. The coupon was 8.625%. Those going for the issue, of whom a big proportion are retail investors, certainly deserve that coupon given that this is a highly cyclical business. The deal was part of a €1.3 billion offering to refinance short-term acquisition funding of CP Ships.
  • Analysts are pondering the new economy minister’s strategy.
  • The annual meeting of EMTA, formerly the Emerging Market Traders Association, has for the past few years been an exercise in watching analysts berate themselves for not being sufficiently bullish about the previous year. The 2005 meeting was no exception: no one thought, a year ago, that emerging-market debt would return anything like the 9% it ended up posting over the course of the year.
  • Republic’s next challenge is to revamp its domestic debt portfolio.
  • Brazil’s economy shrank 1.2% in the third quarter as pressure mounted on the scandal-hit Lula administration. The performance, which was much worse than analysts had been expecting, came after a rise in output of 1.1% in the second quarter. Analysts suggest that Brazil’s high interest rate is stifling growth. At one point the base rate was at 19.75%, before dropping back to 18.5%. Confidence in Brazil has also been shaken by corruption scandals involving the ruling PT Party.
  • A close ally of Hugo Chávez has claimed that the CIA plotted to assassinate Venezuela’s president in the run-up to last month’s legislative elections. Nicolas Maduro, president of the National Assembly, says that the CIA wanted to disrupt Venezuela’s democracy by killing the country’s leader. “They planned to suspend the elections,” he said. “They planned to attack the head of state, assassinate top officials and carry out massive killings – all these charges are backed up by conversations between the very participants.” The CIA has denied all the allegations. “It’s nonsense,” said a spokesman at the agency.
  • EMEA to see further growth in asset-backed transactions.
  • Rash of strategic sales and IPOs planned.
  • Africa: