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June 2006

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  • Who would hand over millions of dollars to a management group of a publicly listed company that does nothing, has no business strategy, has no assets and might never have any assets? But that’s what’s happening as more and more special purpose acquisition companies list. Why won’t the banks leading the deals talk about them?
  • Spacs increasingly interested in listing on UK's Alternative Investment Market.
  • One piece of analysis that is certain to be a fixture on desks this summer is a 59-page report by Goldman Sachs. In preparation for the football World Cup, which kicks off on June 9 in Germany, Goldman Sachs has put together a guide to each participating country and its team’s chances of success.
  • The bad news for Mexicans is that their country is one of the most prone to earthquakes. But at least the government’s financial resources will not be stretched to the limit should one strike following the launch of a $160 million catastrophe bond last month – the region’s first.
  • 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.
  • If a product swamps a market, prices go down. Yet this basic economic tenet seems to have eluded many of the issuers in the Spanish covered bonds market. How else to explain the consistent lack of coordination in issuance endemic in the world of the cédulas?
  • Following a two-year hiatus, Belgium settles trade with Citi.
  • A busy sporting calendar means a burgeoning expense account for many investment banks.
  • Lebanon puts itself back at the hub
  • 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.
  • I was lunching at Cecconi’s with my friend Richard. Cecconi’s is an Italian restaurant in Mayfair frequented by hedge fund hotties, Latvian lovelies with pneumatic mammaries and the odd voyeur such as myself. Dame Marjorie Scardino, chief executive of publishing group Pearson – or her doppelganger – was at the next table. Regretfully, under my Cecconi classification system, she falls into the voyeur category. Well she’s hardly a buxom Latvian is she? Richard is the brother I never had. He is funny, clever, irreverent and, in his spare time, a successful investment banker. If he weren’t one of my closest friends, I would hate him for the insouciance of it all.
  • Although adoption of an exchange-like structure has been predicted for years, foreign exchange has predominantly been traded over the counter. Could a new initiative by the CME and Reuters finally force the transition through? Lee Oliver reports.
  • Here are the bond issuers that have taken the market by storm over the past 12 months: from the IFC, punching above its weight within the World Bank group with its pioneering work in developing local bond markets, to Bayer’s use of innovative methods to maintain its credit profile while making acquisitions.
  • Despite its size and maturity, the covered bond market is fast changing. New countries, new asset classes and new issuers vie for investors. But does the conflict between regulators’ desire for quality and consistency clash with investors’ needs for yield and diversification?
  • “It’s so bloody liquid, it’s not even funny.”
  • NAIC’s SVO brings further woe to the hybrids industry; the US market looks less viable than it once did.
  • Despite brighter prospects for the Japanese economy, corporate issuers are not rushing back to the international or domestic bond markets. Chris Wright reports.
  • A series of recent reforms has raised hopes that the capital markets will have a bigger role to play in Lebanon’s economic story. But is it another false dawn? James Featherstone reports.
  • HSBC’s decision to tell the world in advance when it is will carry out a large FX transaction to pay its non-dollar based shareholders their dividends is transparent. But is it wise?
  • 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.
  • Until recently, it seemed that the big FX players in FX were happy to leave the retail sector to aggregators, perhaps taking comfort from the prospect that once these had built up a decent size position they would see the business anyway.
  • Is there too much capital trying to find a home?
  • The heyday of the traditional debt capital markets is long gone. Who would have thought that, some six months into the year, it would have taken just a $6 billion share of underwriting to take top place in the US investment-grade corporate bookrunner table? Go back to 2004 and it would have been something like $10 billion. Perhaps a bigger surprise is that this number trails behind the equivalent European league table (€8.5 billion).
  • Investors need to tread with caution as uncertainty surrounds the Federal Reserve’s next move.
  • Floating rate notes are typically a short-dated bank product traditionally aimed at other banks’ treasuries. Is this the start of a new trend?
  • The ability of the CDO bid to distort the wider capital markets is significant – and growing.
  • Funds may take the chance to rebalance but don’t expect a crash.
  • 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.
  • Quasi-independent debt management offices are bringing new sophistication to government debt management. But de-risking government balance sheets that have so far failed to account properly for contingent liabilities may be beyond them. Peter Lee reports.
  • The ballooning demand for mortgage credit in Spain is attracting new players and more flexible products.