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October 1998

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LATEST ARTICLES

  • A lot is at stake with the first sale of Mexican airports next month, The aim is not just to work state assets harder but to create a structure that will serve as a corporate governance model for the entire Mexican private sector.
  • With rumours of big job losses in the financial sector doing the rounds, staff at Flemings were getting worried, especially after 65 of their number were sacked at the end of September.
  • Striking out for the sectors
  • Corporate bonds are even less developed in Scandinavia that in the rest of Europe, but a ratings culture could change all that.
  • Fund managers are deluged by research information. Brokers didn't really consider this when they first started providing data electronically. Now they've been persuaded that choice, not undifferentiated quantity, is what is wanted. Mary Cullinane and Simon Asplen-Taylor look at the latest developments.
  • Svenska Handelsbanken and ABN Amro and its subsidiary Alfred Berg are major players in regional expansion and integration of financial services in the Nordic countries.
  • Meet some of the world's biggest investors. The 10 largest Japanese life insurance companies control assets of more than $1 trillion. But with a protected market and no shareholders to answer to, they have always done things a little differently to the rest of us. Now as insolvency fears and foreign competition grow, that is starting to change. Jack Lowenstein reports.
  • In 1997 Intralinks began providing internet-based document management for capital market deals such as syndicated loans. It claims that electronic dissemination can cut hard costs such as phone, fax, overnight mail, messengers, financial printing and paper by up to 30%.
  • Beware the legal pitfalls of receivables financing if you are new to the game, says Christopher Stoakes.
  • Striking out for the sectors
  • Gardening leave can be a dull experience. There's only so much time you can spend lying on a beach, or learning about fine wines. Mark Eban came up with an altogether more exhaustive pastime before taking up his position as head of global equity capital markets at Commerzbank earlier this year.
  • In the depressed Japanese stock market, foreigners are quietly raising their stakes. By the end of March this year, foreign ownership accounted for a record 13.4% of listed Japanese stocks, according to data from the National Conference of Stock Exchanges. The rate has been steadily rising for the past 10 years from 4.3% in 1988. Last year, ending March, saw a 1.5% jump in foreign investment, even as the overall market lost value.
  • Thirty hours before the LTCM debacle hit the newswires Bill McDonough, chairman of the New York Fed, warned an audience of credit quants in London of a "situation which I regard by some considerable margin as the most dangerous since the Second World War". Of course the quants saw it as an attack on their credit models, which, obliquely, it was: which modeller had Meriwether on the radar screen? But McDonough may also have been referring to another threat to the US banking system: the move of Herbie, Euromoney's superbanker, who has been under his distant surveillance for nearly 20 years, back to Boot Hill headquarters in Arizona. David Shirreff
  • The anonymous poet of UBS has been moved to add a coda to his famous Christmas 1997 ballad "Bonus in the bin" (Euromoney, March 1998).
  • On August 24 when Asian markets were being blighted by Russia's debt default, the Indian government was busy closing a $4.23 billion deal that made investment bankers salivate. Over 74,000 expatriate Indians in over 30 countries bought up five-year Resurgent India Bonds (RIBs) denominated in dollars, sterling and Deutschmarks in what was the single largest debt offer out of India. The dollar bonds carried a coupon of 7.75%, a spread of 225 basis points over US treasuries. The State Bank of India, India's largest commercial bank that issued the bonds on behalf of the government, clinched the sale in just 20 days.
  • A falling stock market, a dearth of new deals and a faltering privatization programme: on the face of it the Egyptian securities market seems to be in trouble. But look deeper and the picture is not so bleak. Stock prices are holding up better than elsewhere and there is strong government commitment towards broadening and deepening Cairo's capital markets. Philip Moore reports.
  • Next year, the world economy will shrink. Only Europe will have moderate growth. Wealth destruction will produce a growth recession in the US. Japan will continue to emulate an economic black hole in the middle of a time warp. Emergent economies' growth will be negative.
  • High-yield bond analysts usually resign themselves to a constant treadmill of visits to engineering firms, chemicals plants and pet food factories as they tirelessly assess the worth of the world's corporates.
  • Leading banks, academics and regulators spent two days stress-testing themselves and the latest in credit risk models. David Shirreff reports.
  • We are dominated by ideals: perfect tax systems, monetary discipline, level playing fields and - above all - unambiguous lines of ownership. In the real world, though, financial systems and ownership structures are never quite what they seem. The governance of a US joint-stock company is not that far removed from a Chinese village-owned enterprise. And this may not be the best time to impose our ideals on Asia, argues Harrison Young.
  • In the west, shrinking government, and regions competing for funds under the euro; in the east, a need to upgrade infrastructure and outshine the sovereign credit. The emerging European municipal bond market looks more attractive than bank debt. Marcus Walker reports.
  • On 24 September, Deutsche Bank announced it it had bought a stake of 4.5% in Banca Commerciale Italiana (BCI) for L700billion ($420 million).
  • French banks are starting to restructure and consolidate. But they remain obsessed by the domestic market and are more concerned with market share than return on equity. All that will change with the euro. Rebecca Bream reports.
  • Which banks will weather the storm?
  • To lose one fortune, Mr Meriwether, may be regarded as a misfortune. To lose two fortunes looks like carelessness.
  • Some of the bigger players in European equities reckon the single currency isn't a major driver of the sectoral approach - they were heading that way long ago and the real goal is to look at sectors globally. As Emu approaches, though, smaller local brokers will have to adapt to the new ways or go under. Some will sink but others will survive on specialist knowledge, particularly of small and mid-cap companies. Julian Marshall and Sudip Roy report.
  • It is rare that the interests of investors and issuers coincide exactly, and when they do they have generally been forced to. That is what has happened in the European convertible market. Right now, this halfway-house hybrid does make sense as a defensive outperformer for investors, and a cheap, flexible funding tool for corporates and privatizing governments. Simon Brady reports.
  • Why did Isda beg the CFTC for more time? The International Swaps & Derivatives Association (Isda), with a long history of success in Washington, needed a few more days to frame a response last month to a movement from left field a petition from one of its associate members, the London Clearing House (LCH), to Isda's old arch-enemy, the Commodity Futures Trading Commission (CFTC).
  • With markets in turmoil and attention switching from returns to credit quality, new ways for assessing counterparties are needed. Our second emerging-market bank (Emba) ratings bring a temperature-taking approach to credit. While rating agencies pore over accounts and spend hours interviewing managers, we use the raw financial ratios that drive much of the ratings process. The results are always provocative. This year Emba highlights island paradises in the Caribbean and the Mediterranean where economies and banks have stayed clear of the fallout from global markets. Those seeking banking peace and pina coladas should read on. Brian Caplen reports.
  • For Latin American corporates the doorway to international bond markets is now locked and bolted for the foreseeable future. But what about the loan market? According to Eugenia Wilds, head of the Latin American loan syndication group at JP Morgan, the key bank lenders will hold fast in a storm.