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June 2007

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  • The borrower's perspective; LBO financing: a changing landscape; Prudent expansion is the key; LTM European Holco PIK's – the next stage of the bull market
  • The International Swaps and Derivatives Association and a group of financial lawyers sponsored by the Federal Reserve (the Financial Markets Lawyers Group) have backed a Bear Stearns’ court appeal. In February this year, Bear Stearns was deemed liable for $125 million that fraudulent hedge fund the Manhattan Investment Fund, had deposited in the prime brokerage account it held at the investment bank before it filed for bankruptcy. The bankruptcy court concluded that Bear Stearns was liable for the deposits as their "initial transferee".
  • "We absolutely cannot talk about it," was the repeated response of Goldman Sachs to market reports that it is setting up a mini private exchange to enable alternative investment firms to list without the hassles of regulatory oversight.
  • Standard & Poor’s has raised the long-term counterparty credit ratings for two of Citadel’s funds from Triple B to BBB+. "The funds’ performance in 2006 was strong and at the top of their peer group based on strong contributions across nearly all of the firm’s nine business units," said S&P’s report. "In 2006, Citadel Group reaped the rewards of years of restructuring and investments but also strongly benefited from its acquisition of the energy business of failed hedge fund Amaranth Advisors. Last year saw a significant increase in returns compared with 2004 and 2005, accompanied by an increase of the volatility of returns as measured by the standard deviation of monthly returns, but at all times well within the prescribed risk limits of the funds. The funds have never had an unprofitable year."
  • It was announced on May 25 that Jack Jeffery had resigned as chief executive of electronic broking at Icap. The broker understandably moved swiftly to replace him, announcing that John Nixon would take over the role. Jeffery had overseen EBS’s integration into Icap after it was bought out from its mainly bank-consortium owners in June 2006. Jeffery joined EBS from Citi in February 2002 and he is widely credited with maintaining and then advancing EBS’s position as the market’s pre-eminent spot platform.
  • lnvestors question value of ISE deal.
  • Dividend swaps market soars as investors profit.
  • Increasing international competition for China listings, most notably between London’s Alternative Investment Market (AIM) and China’s domestic markets of Shanghai and Shenzhen, is squeezing market leader Hong Kong, say insiders.
  • Neil Wilson, editorial director at HedgeFund Intelligence explains why the Big Apple still holds some aces.
  • Imminent competition between execution ventures is likely to mean more trading and therefore more money for everyone.
  • Broker dealers collaborate to sponsor Project Alpha.
  • Bear Stearns has hired a new head of sales for prime brokerage in Europe as part of the US bank’s renewed efforts to build a meaningful presence outside the US. The bank appointed James Shekerdemian, from Lehman Brothers, where he was previously head of the quantitative hedge funds sales group.
  • Hennessee’s 13th annual hedge fund manager survey reveals that managers are still shorting despite concerns that uptrending markets were shifting funds to long-only strategies. Hedge funds surveyed had a net exposure of +47%. Average gross exposure was 171%, the highest since the survey in 1995, indicating that more leverage is being used to generate returns. Charles Gradante of the Hennessee Group commented: "Despite the increase in assets and leverage throughout the industry, net exposures continue to remain fairly constant, indicating funds are finding a reasonable amount of short positions. However, we are seeing increased use of derivatives such as credit default swaps and ETFs, which we feel will become more common as the ability to borrow stocks and bonds declines.
  • The stake held by Refco in FXCM, a leading retail aggregator, has been put up for sale by the creditors of the bankrupt futures brokers. Initial bids have to be submitted by June 29. Refco’s creditors will then launch a second round for the highest bidders, ending July 29, with the final winner announced in August.
  • The International Bank for Reconstruction and Development (World Bank) has issued its first euro-denominated global benchmark bond in a move that signals the borrower’s objective of increasing its profile. Its annual dollar benchmark operation had grown a bit stale. "We went on a non-deal roadshow throughout Asia, the Middle East and Europe," explains Doris Herrera-Pol, head of capital markets operations in the World Bank treasury. "We heard from investors that they were really interested in this issue."
  • 180 – the percentage rise in the value of US real estate ECM deals in the year to date over the same period in 2006. The total raised so far this year is $19.5 billion, up from just $7 billion in the 2006 period. The proportion of money raised by real estate companies through convertibles has increased 20 times, and currently accounts for 58% of US real estate ECM volume, $11.3 billion, compared with just 8% in the same period in 2006.
  • Lehman Brothers has made Roger Nagioff global head of fixed income. He replaces Michael Gelbank, who has left the firm. The move came as a surprise not just because Nagioff has an equities background but also because the role will be based in London.
  • It’s not often that you’ll find the majority of Euromoney staff in the same room together, what with vital conferences, meetings and sports-betting events going on all around the world. But to find them all in a church is surely a first.
  • It is often the informal parts of conferences that are the most revealing.
  • Asset managers are part of an unusual issuer mix.
  • weeklyFiX's coverage of FXMS
  • "Algorithmic trading can be shit sometimes"
  • Amid the fallout from the US sub-prime sector collapse, investors are once again questioning the role of the ratings agencies. It’s not just that the agencies assessed the risks so badly; their harshest critics suggest the main cause for concern is that the raters are too cosy with the issuers on which they pass judgment. Alex Chambers reports.
  • "Ours is a top-down, bottoms-up strategy"
  • In most normal markets, when enough investors acknowledge the existence of a bubble, it will burst, so why has China’s ‘A’ share market, arguably the world’s most obvious stock market bubble, not popped yet?
  • The Champions’ League football final between Liverpool and AC Milan failed to live up to expectations but that evening London’s capital markets journalists were treated to an unexpected match between Deutsche Bank and UBS. Deutsche had sent out save-the-date invitations over a month before for a press party on the terrace at swanky restaurant Coq d’Argent.
  • After years on the second tier of economic performance, Germany is ready for a return to the big time.
  • LCDX success gives the green light for the growth of loan derivative products.
  • As the boundaries of corporate securitization are increasingly stretched, the foundations upon which the concept is built are rapidly being eroded.
  • Manuel Villas-Boas tells Laurence Neville how Espírito Santo Financial Group has coped with rapidly changing fortunes and what the family-owned group plans for the future.
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