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June 2006

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  • Greece has lagged behind the rest of the eurozone in its use of techniques to free up value in real estate loans and assets. But banks’ needs for capital should fuel securitization, and new legislation will enable public bodies to make sale and leaseback deals. Dimitris Kontogiannis reports.
  • The dealers at Scottish Widows cemented their reputation as smart traders by winning the Goldman Sachs trading game at the Trade Tech Equities conference for a second year in a row.
  • ...While Wax wows them
  • “Financial institutions should put customers’ needs first”, according to a report published by PriceWaterhouseCoopers on May 24. But should their services extend to matchmaking for young journalists? One of Euromoney’s débutant hacks was secretly pleased on a recent trip back from Moscow when his host bank’s head of IR forgot her passport: the subsequent delay meant a missed flight back to London, and a chance to watch the Champions’ League final in Vienna with the bank’s PR man and a gentleman from the Austrian media.
  • Buy-to-let mortgage originators in the UK market have often argued that these assets should be seen as prime assets rather than non-conforming.
  • Barely a month seems to pass without either the launch of a new foreign exchange trading platform or at the least a significant enhancement and upgrade to an existing one.
  • Why the European government bond markets have failed...and what the European Union would like to do about it
  • Funds may take the chance to rebalance but don’t expect a crash.
  • It is a good job that investors don’t seem to be able to get enough of UK prime RMBS as the pipeline of such paper stood at more than £9 billion ($16.7 billion) towards the end of May. The new RMBS issuers poised to launch into this market (revealed in Euromoney’s April issue) were flexing their muscles mid-month, with Lloyds TSB confirming its RMBS programme and RBS first out of the gate with its £4.7 billion Arran Residential Mortgages Funding. The bank has decided not to set up a master trust but will have securitized £9.2 billion of UK mortgage risk via just two transactions in roughly six months when the deal closes. Arran Residential Mortgages, which accounts for half of the pipeline on its own, should get a rapturous reception, given how buyers responded to Standard Life’s latest Lothian issue, which achieved record tights for the sector with dollar-denominated triple-A paper placed at eight basis points over Libor. Later in the month Granite Mortgages saw triple-B risk sold at an eyewatering 47bp over Libor, which could go a long way to explaining the recent intense issuer interest in this sector.
  • Floating rate notes are typically a short-dated bank product traditionally aimed at other banks’ treasuries. Is this the start of a new trend?
  • Andy Abrahams, you’re rubbish...
  • UBS has appointed Tom Fox and Matthew Koder as joint global heads of equity capital markets, replacing Lucinda Riches, who has headed the division for the past seven years.
  • US inflation fears spooked nervous markets this May, causing the biggest one-day falls in years. In the space of a week, the Nasdaq Composite Index and the FTSE 100 gave up their entire gains for the year. Both indices shed about 7%. Markets took fright at the larger-than-expected 0.6% rise in April’s US consumer prices, which also spilled over into commodities markets. Although many think the sell-off has been exaggerated, May’s Merrill Lynch’s Global Fund Manager Survey shows growing pessimism about inflation and corporate profits. The survey shows a sharp increase in the percentage of fund managers who expect a rise in core inflation, to 64% from 47% a month earlier. A net 9% of fund managers also expect corporate profits to deteriorate while a net 27% except operating margins to deteriorate. Nevertheless, half the sectors in the S&P500 have been posting double-digit earnings growth. Despite the uninspiring outlook for equities, bonds are still looking overvalued to a net 48% of respondents while equities by contrast are still looking underpriced to a net 3% of investors.
  • Richard Longmore, head of EMEA FX sales, has abruptly left Merrill Lynch.
  • Following a two-year hiatus, Belgium settles trade with Citi.
  • Lebanon puts itself back at the hub
  • Greek real estate moves into catch-up mode
  • New Federal Reserve chairman Ben Bernanke received a B+ from economists surveyed by the Wall Street Journal, but the Dean of Columbia Business School in New York would probably fail him if students are to be believed.
  • Just three years ago, any small investor wanting to invest in gold had a very hard time of it. Few ordinary people have the facilities to take physical delivery of bullion, even if the asset class is the ultimate low-risk play because of gold’s inherent value.
  • Reports of the death of analysis have been greatly exaggerated. Time and again, analysts are proving their worth in league tables and through innovation and bespoke research. But ‘me-too’ forecasting is a hard habit to break.
  • At a time when M&A volumes are rising, a toughening up of the CFIUS could deter foreign companies looking to buy in the US. And that would take a serious chunk out of Wall Street’s fees. Kathryn Tully reports.
  • Japanese government-guaranteed issuers such as DBJ and JBIC have been among the largest issuers of debt from Japan. With reform of these agencies in the pipeline, what plans do they have for issuance as interest in the Japanese economy picks up?
  • Indian companies have been the largest issuers of foreign currency convertible bonds in Asia. But there could be trouble ahead.
  • One year on, new bonds offer good value.
  • Hong Kong might have cause to celebrate the PWC report: 97% of the funds raised in the Greater China region were raised in the SAR. Yet it also has much to fear. Always an emotional and volatile market, the Hang Seng Index whipsawed its way through early May after global market wobbles.
  • Merrill Lynch has upgraded Tunisia to overweight in response to the government’s announcement of a $1.56 billion debt management programme to be funded by the privatization of Tunisie Telecom. The bank believes this active approach will help bond prices, and categorizes Tunisia as a defensive asset at a time when the global emerging markets outlook is unsteady.
  • Maverick leader opens arms to international and national investors.
  • General prosecutor to appeal not guilty verdict against Ulan Sarbanov.
  • Too much of a good thing can be harmful, and so it is proving with Asia’s fledgling real estate investment trust sector. Given Asian markets’ passion for property, Reits were always going to be popular. Now one of the latest offerings suggests that investors are becoming more discerning.
  • After years of unfulfilled promise, there is the whiff of optimism in Indonesia as government tackles tangled economic and political challenges. Euromoney spoke to Indonesia’s finance minister, Sri Mulyani Indrawati, about problems, progress and promise. Chris Leahy reports.