Other banks are unlikely to follow the US firm's example of advising on both sides of a takeover

The problem with CDOs

BNP and SG say they are taking a calculated risk, but can the investment pay off?

Government hopes delay will not harm investment 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.

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.

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.

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

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).

Looming implementation of the EU Prospectus Directive is adding momentum

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.

It is not just American businessmen and tourists filling the seats of Thai Airways' new non-stop route between Bangkok and New York.

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.

Options:

Negative returns

Brazil: keep your eye on the ball

It's not just General Electric which is getting all puffed up about green technology through its Egoimagination drive.

Deutsche and Wharton announce Delta

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 largest deal of its kind in Europe will herald an active period in property finance

A new index should provide greater transparency to investors

Global private equity firms increasingly have Asia in their sights. CVC Capital Partners (CVC) a privately owned investment and advisory company, has closed its $1.975 billion Asia Pacific Fund, CVC's second Asia fund and a joint venture with former parent Citigroup.

UK junior market AIM could be hampered by tight interpretations of EU rules on what constitutes a public offer

The rapid pace of development in issuance and investment techniques means that the progression of real estate to become a global asset class in its own right is not far away. Clive Horwood reports.

New services could help solve operational risk issues in credit derivatives

The chairman of the SEC throws his weight behind Sarbanes-Oxley

Delay could mean SEC is reconsidering terms

What was it that Donald Rumsfeld famously said? "There are known knowns, the things we know we know. There are known unknowns, things we know we don't know. And then there are the unknown unknowns, the ones we don't know we don't know."

The rumour mill is creating great opportunities for debt vs equity trades

The potential for a López Obrador administration has hit stock markets

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.

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."

Auna set for LBO record Three consortia of private equity firms are expected to submit bids of around e12 billion for Spanish telecoms operator Auna. If one succeeds, the deal would be Europe's largest-ever leveraged buyout and the biggest globally since KKR bought RJR Nabisco in 1989.

Real estate investment trusts have helped to drive development of the asset class in countries such as the US and Japan. Now a European-wide market is ready for take off. Helen Avery reports.

China's domestic stock markets are a mess, riddled with inefficient companies, gerrymandered by a meddling government and hamstrung by a vast share overhang. Despite these challenges, Invesco Great Wall Fund Management Company has found a way to make money from stock picking. Much of its success rests on simply understanding the realities of its market. Chris Leahy reports.

The Chinese government is at it again. Having already spent at least $45 billion in what may well prove to be vainglorious attempts to fix the country's ailing state-owned banking system, the People's Bank of China (PBC) announced that the State Council has decided to part with another $15 billion of foreign exchange reserves to shore up the capital base of Industrial and Commercial Bank of China, by assets, the nation's largest bank.

A research report published in May by the Institute for Monetary and Economic Research, part of Korea's central bank, recommends that regulators in Korea promote more investment in domestic banks by domestic investors at the expense of foreign capital.

UBS economist Jonathan Anderson describes its as "one of the most, nay, the most overly-hyped themes in the markets today". But the question of when and if the Chinese renminbi – currently pegged at 8.28 renminbi to one US dollar – will be revalued against the US currency continues to fascinate and obsess global foreign exchange markets. There appears to be a growing consensus among analysts that the Chinese government will make some adjustment to the peg in the near future, perhaps even in the present quarter.

Bankers see little chance of a global bond issue

Raiffeisenbank International's CEO, Herbert Stepic, says he intends to use the profits from Raiffeisen's successful IPO on April 21 to bid for Aval Bank, the second-biggest bank in Ukraine. He says: "We are in good negotiations with the owners [private Ukrainian investors] and we hope to come to terms by the start of June." The deal would be one of RZB's largest acquisitions in eastern Europe. Aval Bank has the largest retail banking business in Ukraine, with total assets of €1.5 billion.

Algeria: bank reform picks up pace

Investor sentiment has soured dramatically over the past two months, with more fund managers now expecting growth to slacken and corporate profits to fall. A Merrill Lynch survey of 300 fund managers indicates that a net 32% are now negative about growth prospects and that a net 34% are negative about the corporate profit outlook, a significant turnround from March when investors were positive about growth and corporate profits by a net 11% and 4% respectively. Expectations have not been this low since 2001.

Despite concerns, long-only funds are trying to flatter their returns

News that Knight Trading has agreed to acquire Attain, a small ECN, passed almost unnoticed as the securities industry's attention was focused on the New York Stock Exchange's dramatic decision to merge with electronic rival Archipelago, and on Nasdaq's acquisition of I-Net.

Regulation:

Mizuho has announced plans to establish a private banking company in Japan. The 70-person unit, Mizuho Private Wealth Management Company, will provide consulting services and various personalised financial products for clients with 500 million yen or more in assets. It will be a tough market to crack, however. A private banking market in Japan has never fully taken off despite attempts by both foreign and domestic players. Wealthy Japanese have tended to keep their money on deposit, while the banks have not focused on customer service. Even at a retail banking level, only now is there evidence of a service-oriented banking culture, led by Shinsei and Tokyo Star.

Regulator makes new attempt to solve 'legal person' shares overhang

ECM syndicate merry-go-round BNP Paribas has hired Florence Sztuder from SG to replace Tom Kennedy, who left the bank in April, as head of equity syndicate.

New launch is sign of growing sophistication in fixed income investing

Many funds say the fall-out from GM/Ford has been overstated

With Greece continuing to run budget deficits that are unpalatable to credit rating agencies and breach EU guidelines, the government must look beyond tax increases to deal with the problem. Dimitris Kontogiannis reports.

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.

Stock markets are unimpressed by president's pro-business reforms

The unwinding of correlation model price-driven trades has caused losses, but the credit markets have withstood the post-GM fallout

Cash rich investors are looking to put their money to work

Since the adoption of an enabling law in 1999, Portugal's securitization market has grown rapidly, embracing many of the innovative techniques and influences seen elsewhere in Europe. With a new law allowing issuance of covered bonds expected this year, structured finance volumes look set to grow. And the market remains eager for further innovation. Sarfraz Thind reports.