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

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.

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".

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

As the boundaries of corporate securitization are increasingly stretched, the foundations upon which the concept is built are rapidly being eroded.

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.

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.

After years on the second tier of economic performance, Germany is ready for a return to the big time.

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.

Imminent competition between execution ventures is likely to mean more trading and therefore more money for everyone.

Interest-rate-related MTN supply has fallen.

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.

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.

Merrill Lynch’s real estate team is looking decidedly thinner on the ground after a series of recent departures. CMBS head Nassar Hussain has left the bank along with John Bigley and Pascal Richard. They are understood to be heading off to different ventures: Hussain is rumoured to be setting up a Middle East-based property fund.

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.

Asset managers are part of an unusual issuer mix.

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.

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.

Euromoney journalists are used to conversing on all manner of subjects related to financial matters but last month your reporter found himself engaged in a most surreal topic: lactation rooms at banks.

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.

weeklyFiX's coverage of FXMS

"Algorithmic trading can be shit sometimes"

The recent disruption in the US sub-prime mortgage market served as a warning to the CDO market of what happens when deals are backed by increasingly risky underlying assets. So why aren’t CLO managers – who are now buying single-B rated, covenant-lite loans in their droves – paying more attention? Louise Bowman reports.

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.

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 is often the informal parts of conferences that are the most revealing.

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.

LCDX success gives the green light for the growth of loan derivative products.

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.