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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
  • Euromoney’s borrower awards capture the most important names and trends seen across the globe during the past 12 months.
  • "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.
  • Hedge funds have massively outperformed global equities over the past decade, as shown by HFI’s regional indices for the US, Europe and Asia. They have had a bright start in 2007 too.
  • In the second part of our debate on FX, we examine the buy side as it develops its interest in new instruments such as exotic options, and examine key areas of innovation such as prime brokerage and e-commerce.
  • Market mechanisms, not inflexible penal taxation, are the way to deal with global warming. And market approaches also open profitable channels for investors.
  • The smart money is already betting that the credit cycle is turning.
  • "Algorithmic trading can be shit sometimes"
  • "Ours is a top-down, bottoms-up strategy"
  • Neil Wilson, editorial director at HedgeFund Intelligence explains why the Big Apple still holds some aces.
  • Asia’s high-yield market has taken off, driven by unprecedented demand from investors. Public deal structures are becoming increasingly aggressive and private deals are beginning to leak into the public markets, giving cause for concern. Chris Leahy reports.
  • ABS CDOs are back buying sub-prime ABS but all remains far from well in the asset class.
  • Synapse Investment Management, which was founded in 2006 by Graeme Anderson and Mark Holman, has put itself firmly on the map with the recent hire of Rob Ford from Barclays Capital.
  • The hybrid sector’s focus might be turning to Asian retail but as Euromoney went to press Munich Re announced an interesting €1 billion benchmark hybrid transaction – rated A3 (Moody’s)/ A (S&P)/A+ (Fitch) – with Deutsche Bank, JPMorgan and UBS as bookrunners.
  • The Colombian government’s decision to impose further capital controls in order to hinder the peso’s rapid appreciation amounts to "bad policy-making", according to Walter Molano of BCP Securities. In a research note on May 25 Molano said: "Colombia is one of the few emerging market countries that is not taking advantage of the commodity boom. Instead of focusing on its vast natural resource base, Colombia is exploiting the special relationship it enjoys with the US to secure quotas and preferential tariffs for light manufacturers – particularly textiles and clothing." The new regulations extend yet further the compulsory deposit requirements for investors.
  • Argentina’s capital markets could lose some of their most important local investors at the end of this year as the government pushes people to move away from private pension funds to a new state-run scheme.
  • Brazil’s market-leading ethanol producer, Cosan, recently made a U-turn on strategy that says a lot about the overheated market for the chemical. The firm rushed out announcements that it would shift from an acquisitive strategy to one that emphasized organic growth, including upgrades of existing facilities and mechanization of the sugar harvest, as well as expansion in less-competitive geographical areas. It blamed prices that it said were "in the clouds" for the rethink. At a hastily convened press conference, managers said that the price of acquisitions in the sector had risen by 147% between April 2005 and January to April of this year, according to the firm’s own calculations.
  • Venezuelan president Hugo Chávez has responded with scorn to criticisms that his refusal to renew the licence of opposition TV channel RCTV amounts to a direct assault on freedom of speech. The popular channel, which Chávez accuses of having supported an attempted coup in 2002, stopped broadcasting on May 27, leaving the country bereft of many of its favourite soap operas and comedy shows, and also of any mainstream anti-Chávez television. Chávez described as "laughable" the passing of condemnatory motions by both the Senate Foreign Relations Committee in Washington and the European Parliament. The president clearly fancies himself as something of a media mogul: Venezuela is to give Danny "Lethal Weapon" Glover $18 million for a film about the Haitian slave uprising.
  • UBS has hired loans syndication specialist Monica Macia from Citi to work as an executive director on the loans capital markets group. A spokesman for UBS said that the firm had no comment to make on speculation that the move suggests a change in emphasis for the bank.
  • 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.
  • 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.
  • 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.
  • Dividend swaps market soars as investors profit.
  • The sell side’s failure to engage its clients in plans for Project Turquoise could jeopardize its success.
  • Broker dealers collaborate to sponsor Project Alpha.
  • Unknown risks – the black swans – could upset the Asian party.
  • Investors are concerned that while low yields on Latin American sovereign debt and increasing opportunities in the corporate sector are driving more and more investors towards corporate fixed income, Wall Street credit research can’t keep up.
  • Brazil, which is already a major player in the $30 billion global trade in carbon credits, aims to hold its first online carbon credit auction this year on the São Paulo BM&F commodities and futures exchange in an initiative geared towards attracting European buyers. "We hope to reach an accord with one particular company interested in selling its credits via auction in the second half of the year," says Guilherme Magalhães Fagundes, the BM&F’s head of special projects. With a lack of liquidity in the world carbon credit market, daily trading is still some years away, but the BM&F says it aims to make the auction possible on the basis of buyer or seller demand and widen carbon credit sales away from the current business-to-business format.
  • Tapping into the growing trend for green investing, in May CLSA Capital Partners launched Asia’s first dedicated water and waste management fund, Clean Water Asia.
  • Credit Suisse and Instinet, the agency broker owned by Nomura Holdings, announced in May that they had agreed to link up their proprietary "dark liquidity pools" in Japan to enable their respective international clients to trade more efficiently in Japanese securities by executing larger trades with minimal market impact.