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March 2001

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  • Berlin has not quite finished growing together, though it's well on the way to being rebuilt, with the near-completion of the Potsdamer Platz project.
  • Merrill Lynch is reshuffling its European investment banking division to create a new structured credit unit.
  • Issuer: Ballarpur Industries Amount: Rs1.5 billion Launched: February 2001 Lead manager: DSP Merrill Lynch
  • Participants in Chunghwa Telecom's on-off American depositary receipt (ADR) issue are playing a game of bluff and double bluff as they amass support for a dignified climbdown on the deal's pricing stalemate.
  • The message is clear - China rules, OK?
  • In the internet bond trading arena the present number of competing platforms is unsustainable. The consolidation process started last month with the coming together of Market Axess and Trading Edge.
  • France Telecom has set a troubling precedent for all those telecom companies that were desperately hoping to turn to the equity markets to raise funding and reduce their leverage.
  • Allen Wheat must sometimes wish he had never done his big merger. CSFB's chief executive officer was the driving force behind last year's acquisition of Donaldson, Lufkin&Jenrette, widely adjudged one of the least logical deals of the year.
  • Despite investor demands for tighter dot com management controls, B2B and B2C companies still have little awareness of their exposure to legal risk By Nigel Page
  • David Clementi, deputy governor at the Bank of England, says the use of credit derivatives in securitization poses a threat to capital market stability.
  • Morgan Stanley is making its latest attempt to woo UK institutions with the launch of its new multi-asset-class product.
  • After trying to be in four places at once, Morgan Stanley’s chief investment officer, Joseph McAlinden, is looking forward to moving to a permanent base, on the Avenue of the Americas.
  • Never bet against the Fed. That's the advice many in the US are giving at the moment. It forms part of their core argument that the US cannot be heading into recession, because the Federal Reserve, and especially its chairman, Alan Greenspan, is on the case.
  • One of the biggest talking points in the Basel accord is the proposed charge for operational risk. But devising a system for monitoring and measuring operational risk that is subject to external review presents quite a challenge.
  • CSFB hopes "to get the orthodox, corporate listed exchangeable bond structure working in Japan", but certain obstacles are making this and other sophisticated equity capital markets techniques difficult to establish.
  • Global head of primary capital markets, Barclays Capital
  • London hosted the first worldwide conference of central counterparties last month to discuss developing a system of seamless global clearing.
  • It's easily done - a typing error slips through unobserved on your computer as you tap frantically on your keyboard. But such errors can cost thousands, even millions of dollars, if you're a bond trader. And traders say the risks of expensive and embarrassing mistakes occurring are made even greater by the lack of standardization among electronic trading platforms.
  • The IMF is making changes to pacify the Bush administration after new US treasury secretary, Paul O'Neill, sounded a note of scepticism about the role of supranational organizations in the capital markets. O'Neill stated on February 15 that he attaches particular priority to a "transparent and accountable" IMF. O'Neill sees the IMF's role as one of a watchdog in the markets, alerting governments to growing problems before they fully develop.
  • Argentina is now number eight in a quarter-trillion dollar stream of rescue packages to bolster the credit of threatened emerging economies. Mexico was the first in 1995, recipient of what was supposed to be a one-time $50 billion ransom for world stability. But that failed to factor in the next round of play. Instead, crises have impacted more often and with greater force and will continue to do so as past example teaches the markets that speculation is protected by a G7 guarantee. Adam Lerrick proposes that the private sector should provide the first line of defence with standby financing subsidized by the IMF as a global public good
  • The Portuguese bond market is caught in a pincer grip. More liquidity is required to attract foreign investors but that can only be achieved if the trend for domestic investors to move to other euro markets is at least partly reversed. Some success in improving the situation has been achieved but there is much still to be done.
  • When the new Basel proposals come into force in 2004, the effects will be felt throughout the financial system. Corporate and sovereign borrowers should see their borrowing costs increase or decrease as a result of the change in bank asset weightings.
  • All the online bond trading platforms that are likely to emerge have already been announced. That already seems to be too many. One merger has already taken place and others will probably follow soon.
  • The last round of deal-making in Portugal’s banking sector has now come to a halt. Another round of consolidation may follow, as the newly-merged banks continue to eye each other.
  • The jaws of a trap are closing on Europe’s telecom companies. Credit rating agencies and debt providers will punish them unless they reduce the huge debts they took on to build in new markets. The telecom companies have promised to do this by floating subsidiaries and selling assets. But the very equity investors that encouraged them to leverage up and go for growth won’t buy these now. The banks won’t lend either and more downgrades are likely. The scales have fallen from debt and equity investors’ eyes. Where once stood, solid, dependable, utility-like incumbents, they now see risky, new-economy companies that have bet heavily on unproven technology and have limited access to the funding needed to make it pay. The telecom companies may have to take drastic action in order to survive.
  • Prescient, a pioneer of direct debt issuance over the internet, intends to expand into other products in the coming months, with the next target being certificates of deposits in the US.
  • The news coming out of Japan has for a long time been wholly discouraging. Its economy has been on the operating table for the best part of 10 years. The government, unsure, unable or unwilling to make use of the scalpel, resorts to placing band-aids over gaping wounds. The cauterizing effect of injecting trillions of yen into the ailing system is also wearing off. Intermittent signs of recovery often prove no more than false dawns. And the country is running out of its self-prescribed medicine. But there are going to be some winners – quite possibly the foreign investment banks. As companies take it on themselves to restructure, or are forced to, those familiar vultures are circling overhead.
  • Brazil's Novo Mercado is Bovespa’s latest attempt to bring the country's Brazilian equity markets up to western standards of transparency, liquidity and governance. It is modelled on Germany’s Neuer Markt, but so far hasn’t had any listings.
  • So far, Telecom Italia is the only telecoms company to make public plans to issue a securitized bond. It will raise up to Eu1 billion in the second quarter of 2001 by selling bonds secured on fixed-line customer bills.
  • The new Bondbook trading platform, which was designed with ease of use in mind, is more of a fixed-income initiative than a technological one.