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November 2007

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  • Click here to download pdf including photos of the event
  • Royal Bank of Canada has launched its €15 billion covered bond programme with a jumbo issue in the European covered bond market. The deal is Canada’s first ever covered bond.
  • Mifid came into effect on November 1 but the market had already been benefiting from the innovation it encourages. Peter Koh reports.
  • The CEO suites of Wall Street have their first vacancy sign since the world learnt what sub-prime means.
  • A new study confirms the substantial benefits of a depositary receipt programme.
  • Tranches on the LCDX index debuted in mid-October, receiving a warm reception despite the cautious atmosphere in both the cash and synthetic leveraged loan markets. Dealers shrugged off comparisons to the doomed tranches on the ABX index (TABX) and are quietly confident that LCDX tranches will prove to have merit. However, given the still-fragile state of the credit markets, they are not expecting the new product to take off overnight.
  • The reaction to JPMorgan, Bank of America and Citi’s proposals to launch a super-SIV called M-LEC to solve the liquidity crisis in the ABCP sector has been an equal mix of enthusiasm and cynicism.
  • Despite the help of a couple of jumbo multi-billion euro deals by Fortis and UBS, the European convertibles market appears to be shrinking.
  • 180,600,000,000 the dollar amount of equity capital raised in Bric countries (Brazil, Russia, India and China) so far this year. The total is up 137% on the same period in 2006 thanks to record volumes across all Bric markets.
  • MTS will probably unveil the mechanics behind the new trading structure for its European government bond trading platform before the year-end. A brief statement last month put to rest months of speculation on whether the MTS Supervisory Board would allow non-banking participants to trade on the platform, which up to now has been the preserve of primary dealers. The verdict was positive but surprised many as the decision has been mired in controversy for some time since it was first mooted over a year ago. In fact, such was the level of discord among bankers that few believed the platform would be able to approve a radical move and still retain its market position.
  • In front of a US Senate committee, the agencies are indignant while investors claim they are focusing on the wrong signals.
  • RBC Capital Markets has made Mike MacBain co-head of its global debt markets business. MacBain, who will be based in New York, will focus on financial products and commodities, alongside Richard Pilosof. MacBain was most recently president of TD Securities and global head of DCM and cash equities.
  • What was hailed as a great success for the credit derivatives market, the tackling of the unconfirmed transaction backlog, has turned out to be far from a mission accomplished.
  • For much of the past couple of years, ECM bankers have had to sit on the sidelines as IPO mandates slipped through their fingers as companies opted instead for sales to private equity buyers. The current weakness in the credit markets, which is making life difficult for leveraged buyouts, has, however, turned the tables. In October, Cadbury Schweppes announced that it planned to spin off its US beverage unit, the maker of Dr Pepper and 7 UP, after a seven-month search for a buyer was derailed by the credit market crunch.
  • Spate of high-profile delistings by blue-chip European companies boosts Pink Sheets’ premium market segment.
  • Markit and Creditex held the first-ever LCDS credit event auction on October 23. The duo were the official administrators for the auction of US video store chain Movie Gallery’s defaulted contracts. Establishing a cash settlement price via an auction avoids difficulties arising from the fact that many contract holders might not have a position in the loans underlying CDS contracts.
  • In some parts of Latin America foreign banks continue to head the push for consolidation, but locals are beginning to cross borders. Chloe Hayward reports.
  • India’s booming stock market was given a thorough hiding on October 17. Rumours had been swirling for days that the country’s market regulator, the Securities and Exchange Board of India (Sebi), was planning to ban the use of participatory notes (PNs), which allow any foreign institution to invest directly in India-listed stocks without having to be registered in the country as a foreign institution.
  • Economic growth, stability, market reform and liberalization have led to a Latin American investors into Chile, Colombia and Peru. Leticia Lozano reports.
  • The US dollar’s long-term weakness looks set to persist as the currency seems to fall to a fresh historical low against the euro on a weekly basis. The latest G7 meeting, held over the weekend of October 20-21, did nothing to provide any support. In the immediate aftermath of the meeting, the dollar fell to 1.4349 against the euro before bouncing. The reasons for the recovery, at this stage, are not clear.
  • As Brazil’s economy and financial markets pick up, Credit Suisse and UBS face growing competition from other foreign banks and domestic contenders. Chloe Hayward reports.
  • While Hong Kong, Shanghai, Singapore and others enjoy unprecedented levels of activity, and London and New York poach more Asian business, the Tokyo Stock Exchange is struggling to recapture the success of its early 1990s’ heyday. Is it too late for Tokyo? Lawrence White reports.
  • Scotiabank has long had an interest in Latin America, with assets throughout the Caribbean and Mexico. Recently Canada’s number two bank has stepped up its presence by buying a bank in Chile, expanding in the Caribbean and announcing plans to open 100 branches in Mexico. Along with this push, the CEO announced the appointment of Anatol von Hahn, who will take over as head of Latin America in January. Chloe Hayward talks to Peter Cardinal, the head of Latin America at Scotiabank, about its plans for the future before he bows out.
  • Hong Kong’s notoriously volatile investors are again set firm in headless-chicken mode (the bullish version). Ever since China’s foreign securities regulator, Safe, announced in August that mainland investors would "soon" be allowed to begin throwing their hard-earned savings at Hong Kong-listed stocks, the local Hang Seng index has been on a superhuman tear.
  • The NFA is seeking to up the ante in its fight against the bucket shops that tarnish the US retail FX market.
  • The collapse of structured finance issuance has significant implications for the financing of assets such as mortgage loans but has also dramatically changed the nature of the traditional investment-grade bond business in America. Alex Chambers reports.
  • The news that spot rouble trades have taken place electronically on EBS and LavaFX between Russian and foreign banks has been taken by some observers as proof that the currency has taken a significant step towards full convertibility. However, the deals mask the fact that Russia’s settlement system is still a real impediment to the rouble’s wider acceptance and is harming the government’s hopes that it will one day be accepted as a reserve currency.
  • "You’re fired" is the new "You’re free".
  • Many have struggled to beat regular equity market returns, especially after liquidity crisis, says research.
  • China’s mergers and acquisitions market is gathering steam after a couple of relatively quiet years. Elliot Wilson reports.