Block trades help to make ECM bankers look busy in quiet times. But their success rests on a knife edge. • Peter Koh reports

Investment banks are eager to do debt deals involving derivatives with Italian local authorities. Such a high level of competition is good news for the borrowers but they are also facing closer regulation of their use of innovative structures. • Jennifer Morris reports

The German banks' latest ploy for repairing balance sheets bloated with non-performing loans is laughable. Siphoning off the good loans and leaving behind the non-performing ones - those that the banks really should be doing something about - can only result in balance sheets in worse shape than before.

Who says economists are dull? Three of Wall Street's finest, and most bearish, took part in an early-morning debate about the impact of the Iraq war on the US economy at the Council for Foreign Relations in New York last month. At times it was like stand-up comedy, with Morgan Stanley chief economist Stephen Roach as the main act.

Last month HS Securities of Japan secured the 100% purchase of Agricultural Bank of Mongolia when its head, Hideo Sawada, delivered $6.85 million to Ulaanbaatar.

The Indian stock markets fundamentally reassessed Indian information technology stocks last month. Jolted by a sharp fall in profit margins and a profit warning for the next fiscal year from Infosys, the bellwether for Indian IT companies, the stock sank. The market capitalization of Indian IT stocks has shrunk by over a third this year to Rs662.8 billion ($14 billion) on April 24, tipping the 30-share Bombay Stock Exchange Sensex to a six-month low. That is likely to lead to the postponement of an initial public offering by Tata Consultancy Services, the biggest exporter of Indian software services, which has been trying to list for over a year now.

The term "black box" investing has often been applied to quantitative fund management, though it is seen by its practitioners as a somewhat pejorative description. Whatever black boxes they have at BGI, they certainly seem to work.

The history of legislation on banking foundations in Italy is not a happy one. Successive governments have tried to stamp their mark, with the aim of eroding the foundations' power. This government is no different. Finance minister Giulio Tremonti has tried to wrest a bit more influence from them and next month, or perhaps the one after, could be the moment of truth. That's when the constitutional court will present its decision on whether the foundations must sell the shares they hold in banks. It isn't difficult to see why what these bodies do interests the government. Between them, the 89 foundations hold almost e40 billion in assets, including big stakes in Italy's banks. This ownership dates back to 1990, when the government decided to split savings banks into two in recognition of their different and sometimes conflicting functions. One body - the bank - became a joint-stock company responsible for financial operations. The other - the banking foundation - retained charitable status and a social role, maintaining cultural attractions and historical monuments for example.

The president of the Philippines, Gloria Macapagal Arroyo, speaks to Euromoney's Asia editor Chris Cockerill about the state of the economy, the battle against corruption and the future of the country after her term of office finishes.

Investor demand for US

For two months Hong Kong's 6.8 million residents have been at the centre of the Sars (severe acute respiratory syndrome) outbreak, better known across the border in mainland China as "strictly avoiding realistic statistics". But the crisis now seems driven more by fear and hysteria than actual risk of infection.

The aftermath of war in Iraq may delay a few project finance deals in the Middle East but the market is in good health. Development diversification will spur large projects. Sponsors, however, may have to accept more costly financing.

Source: www.breakingviews.com is Europe's leading financial commentary service.

After Mexico came to market successfully with its collective action clauses (CACs), most observers reckoned that the IMF's plans for a sovereign debt restructuring mechanism (SDRM) would not be taken any further. The US Treasury in general, and undersecretary for international affairs John Taylor specifically, was known to be a zealous proponent of CACs, and now that the market had managed to adopt them there was no reason to threaten it with SDRM.

Oil majors Yukos and Sibneft tied the knot in Russia's first mega-merger last month and have created what will soon be the world's biggest oil company. At a stroke the creation of YukosSibneft drew a clear map for the development of Russia's oil sector, forcing the country's three largest companies to ready themselves for battle over the remaining oil and gas assets.

Never let it be said that communists are out of touch with market reality - North Korea, sensing an opportunity to finance itself is to issue its first bond. Ruling party daily Rodong Sinmun says the bond issue "is an important measure to raise funds" to "crush US imperialists", a pitch that is sure to play well with investors.

One key clause in Uruguay's proposed collective action clauses closes a loophole that Mexico left open in its own bonds: the question of whether the issuer could use exit consents on the payment terms of bonds with CACs. Exit consents, even on non-payment terms of bonds, are generally considered coercive and rather bad manners, even if a necessary evil for countries seeking to restructure their bonds.

In a period when panics have outweighed optimism among investors, the Sars epidemic is just the latest in a series of shocks that have cast doubt on Asian companies’ ADR prospects. • Chris Cockerill reports

How do you entice a highly rated, well-respected and conservative issuer to use a product they've never used before? You offer them a whole new investor base willing to buy a security that bags the issuer savings of 40 basis points over Libor. That's what Wells Fargo managed last month when it issued its first convertible in at least 25 years.

Head of EMEA debt capital markets, Banc of America Securities

Following last year's surprise jump up the rankings, UBS has now made it to the top of the market share table in Euromoney's annual forex poll. Katie Astbury reports; research by Andrew Newby, Paul Pedzinski and Dave Skallinder.

New technology is being developed to make hedge funds more transparent to investors. Risk management system provider Riskdata and Equalt, the alternative investment arm of Crédit Agricole Indosuez, are developing software to enable institutional clients to simulate the risk profile for different combinations of funds before they invest. They are working on an application for Riskdata's online risk management system. Initially it will enable investors to test how the Equalt fund would fit with their portfolios. "It's like opening a window on what we have on the book without disclosing actual positions," says Christophe Turpault, manager of Equalt's fixed-income arbitrage fund. This gives institutional investors more transparency about the risk of including funds in their portfolios. At the same time it allows the manager to protect the funds' positions.

Source: www.breakingviews.com is Europe's leading financial commentary service.

Uruguay is seeking to push out the maturities on its bonds to give it time to get its economy back in shape before having to repay its foreign debt. It's doing this by means of one huge exchange offer, with which it is trying to swap all of its outstanding bonds for similar bonds of longer maturity.

UK brokers and fund managers are confronted bold new plans drawn up by regulator, the Financial Services Authority, to force them to separate trading and non-trading costs when they charge clients. Thomas Williams talks to Christina Sinclair, head of the FSA’s business standards department, about the proposals

Long Yongtu, China's former vice-minister at the finance and economy ministry and the country's chief negotiator for its entry into the WTO, might want to forget his performance at Credit Suisse First Boston's recent investment conference in Hong Kong. It could haunt him for a long time to come.

Barclays Capital's CEO, Bob Diamond, talks to Antony Currie about his ambitions for the firm, explains why it is not delving into prop trading and why it won't be hurt by a bursting of the bond market bubble. And he reveals that one of his favourite businesses right now is equities.

Now that the military battle in Iraq is over, my sense is that equity markets want to go up. But I don't believe that this is the start of a new bull market. It is just the eye of the storm of the secular bear market. The bounce will eventually die down and the bear market will reassert itself. We have not seen the lows yet.

A restructuring of Iraq's financial obligations is arguably the most important initiative that must be undertaken in that country next to providing humanitarian assistance.

Investors are still piling into US corporate bonds but there’s little sign of improved credit quality to justify this desperate enthusiasm. What’s more, interest rates must rise sooner or later. • Kathryn Tully reports