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June 2005

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  • The problem with CDOs
  • A Goldman Sachs trading game at the Trade Tech Equities conference in Paris this April was billed as "five hours to make a million."
  • Other banks are unlikely to follow the US firm's example of advising on both sides of a takeover
  • As the huge US and global debt bubbles burst under the weight of the cost of servicing, the US is certainly not the place for investors to be this year. Look instead to Europe, Japan, cash and gold
  • Some banks are already seeing an uptake from new buy-side clients
  • Everyone expected the downgrade of Ford and General Motors to junk status. Now it has happened, the long-term consequences for the market are unclear. The move threatens to wipe out the trading profits of hedge funds and banks, with CDOs causing particular concern. Mark Brown reports.
  • Looming implementation of the EU Prospectus Directive is adding momentum
  • Investors welcome a market-friendly deal achieved with the minimum of fuss
  • Cash rich investors are looking to put their money to work
  • The New York Stock Exchange's historic deal with electronic rival Archipelago and Nasdaq's acquisition of rival I-Net dramatically reshape US cash equities trading. But what do they mean for OTC and listed trading, regional exchanges, and users now that the SEC's controversial Reg NMS has been passed? Peter Koh reports.
  • The chairman of the SEC throws his weight behind Sarbanes-Oxley
  • Delay could mean SEC is reconsidering terms
  • It's not just General Electric which is getting all puffed up about green technology through its Egoimagination drive.
  • Despite a more uncertain rate and credit environment, new issuers and investors continue to enter the covered bond market. As the boundaries between traditional and structured products blur, Asia and the US are the targets.
  • The Asian bond markets have given investors an easy ride in the past two years. Now, with inflation and interest rate uncertainty, buyers need to be smarter.
  • Stock markets are unimpressed by president's pro-business reforms
  • Government-guaranteed issuers have long been a mainstay of the Japanese bond markets. Now the zaito issuers are seen as a market in their own right. Chris Leahy and Andy Wright report.
  • Negative returns
  • Management of emerging markets lender Standard Chartered Bank is putting its own advertising slogan, 'We go the distance so you go further', to good internal use in its efforts to integrate its largest acquisition, the US$3.4 billion deal with Korea First Bank (KFB).
  • Singapore: REITS get more sophisticated A series of recent transactions from Real Estate Investment Trusts (REITs) in Singapore, the de facto non-Japan Asia centre for the specialist property investment vehicles, are proving not only the popularity of the asset class with investors but also their flexibility as funding vehicles for real estate assets.
  • Is Germany really ready for full-blooded capitalism? That was the theme of the first Euromoney German Capital Markets Forum, which saw a lively debate on how Germany will finance itself in the future.
  • What connects the world's best borrowers in 2005? Their ability to secure attractive funding through innovative structures or reaching out to new markets, often when the conditions are not in their favour.
  • It is not just American businessmen and tourists filling the seats of Thai Airways' new non-stop route between Bangkok and New York.
  • The International Swaps and Derivatives Association held a gala dinner in London in May to celebrate its 20th anniversary.
  • Banks readjust after rare correction in asset-backed market Structured credit markets approach the June half-way mark with the spread cycle reversed. All but the most recent new issues are trading below par and the heady times of heavily oversubscribed deals are over for now.
  • Investors snapped up the bonds on rarity value, as Germany went for an early deal
  • FX settlement system CLS has responded to its member board's request to investigate the feasibility of adding a matching and netting facility for non-eligible currencies (NECs) and the settlement of FX option premiums, non-deliverable forwards (NDFs), interest rate swaps and credit derivatives. CLS Bank Settlement Members have been meeting with CLS to thrash out the design and the attractiveness of the inclusion of these more complicated FX-related products. While use of FX derivatives has grown, some banks have voiced concerns that the pace of growth is stretching their back offices. "FX players are now being squeezed between the conflicting forces of growth and the need to tidy up their operations," says Jonathan Butterfield, executive vice-president at CLS. "The optimal way to do this is to establish a level of standardization and use of common infrastructures collectively."
  • Other banks' proprietary platforms need to pick up market share fast
  • Leveraged buyouts and auto company problems are taxing the minds of bond investors, but there's a more insidious form of event risk they should be wary of. Company executives, under pressure from boards and active investors including hedge funds, are starting to engage in financial engineering to try to boost their stock price. Bondholders are set to lose out. Antony Currie reports.