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

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.

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.

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.

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.

The sell side’s failure to engage its clients in plans for Project Turquoise could jeopardize its success.

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.

Interest-rate-related MTN supply has fallen.

The jumbo covered bond market had another banner year in 2006. A record €170 billion of issuance was accompanied by significant globalization of the market. But the growing range of structures, from an ever-expanding group of countries, is a double-edged sword, adding complexity as well as diversification.

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.

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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.

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.

Neil Wilson, editorial director at HedgeFund Intelligence explains why the Big Apple still holds some aces.

The chances of a single Gulf currency receded further in May after Kuwait decided to break away from its US dollar peg and fix against a currency basket instead. At the time of writing the make-up of the basket was not known.

Never let it be said that Euromoney hacks won’t go that extra mile to ensure our readers enjoy the hottest stories from the world’s frontier markets.

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.

Gary Cottle has left Morgan Stanley less than a year after joining the US investment bank. He joins Royal Bank of Scotland as head of corporate risk solutions for the UK and Europe.

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.

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.

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.

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."

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.

Unknown risks – the black swans – could upset the Asian party.

Russia’s Agency for Housing and Mortgage Lending priced the first domestic public MBS transaction last month via Citi. The financial institution placed Rb2.9 billion ($112 million) of class A bonds on Micex, the Moscow Interbank Currency Exchange. The transaction will act as a benchmark for future Russian domestic MBS issuance. About 20 investors were attracted to the bonds.

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 latest chapter in the Great Game saga has been opened with a landmark agreement to build a gas pipeline linking Turkmenistan with Russia. The accord is widely seen as a blow to the interests of US and western Europe, which had hoped that Turkmen gas would be channelled through a western-backed trans-Caspian Sea pipeline that would bypass Russia.

UK venture capital firm Oxford Capital Partners and Qatar National Bank and its private banking subsidiary Ansbacher Group have teamed up to form Qatar Capital Partners (QCP), a venture capital business in the Gulf state.

In Euromoney’s February 2007 Islamic finance awards section, we incorrectly stated that the PCFC or Dubai Ports $3.5 billion pre-IPO convertible "was structured by Deutsche Bank". The transaction, Best Islamic finance deal of the year, was structured, arranged, underwritten and distributed by Barclays Capital and Dubai Islamic Bank only, while Deutsche Bank was advising PCFC on the acquisition of P&O. We regret any inconvenience that may have been caused.

TAM, Brazil’s leading low-cost airline, is seeking to maintain and improve its position with funding such as its recent 10-year bond. CFO Libano Mirando Barroso talks to Chloe Hayward about the bond and the airline’s business strategy.