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October 2006

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  • The landscape of the Italian banking market has been completely redrawn over the past 12 months but consolidation remains work in progress.
  • Vallimarescu eyes opportunities in local markets.
  • Australia is going ahead with a scaled-down sale of its Telstra holdings. But tension persists between the telecom operator and the government.
  • A liberalization of the mortgage market in Argentina could lead to a rise in securitizations and the creation of the country’s equivalent of Fannie Mae and Freddie Mac.
  • Benefit of hedge fund ratings to investors is questionable.
  • First Fiji, now the Seychelles. Suddenly, all those long hours that originators spend on planes en route to visit potential clients seem less tedious.
  • The man behind Man Group is to step down from his role of CEO.
  • Mexico broke ground this year with a $160 million, three-year catastrophe bond to cover an earthquake disaster, the first developing country to do so. With the success of that issue, Mexico’s finance ministry is now considering issuing against hurricanes and intense rains that cause flooding. As Mexico recovers from the devastation brought by Hurricane John in September and scientists warn of ever-more severe weather because of global warming, the need to protect against such disasters is clearly urgent. According to José Antonio González Anaya, the finance ministry’s insurance chief, bonds issued by the hurricane-prone US state of Florida could serve as a model for Mexico. Those bonds generally pay more interest than corporate bonds with the same rating and need a category 5 hurricane directly hitting a city to trigger them. The finance ministry says that ideally Mexico would issue a cat bond against hurricanes before president Vicente Fox ends his term in December. Even if that goal is not met, president-elect Felipe Calderón is expected to follow a similar, pro-market economic policy and Mexico’s cat bond issuance is forecast to continue. “What’s important is to find innovative insurance schemes to protect our natural disaster fund and our public finances,” González Anaya says, adding that the bonds give the government immediate access to funds should disaster strike. He adds that Mexico went ahead with the earthquake bond first because although hurricanes are far more frequent than earthquakes, an earthquake’s intensity is easier to measure and easier to insure against. Heavy rains are even more complex disasters because risk levels must take into account the probability of mudslides and other rain-related disasters.
  • “Nobody should be scared of socialism, it’s about equality”
  • Europe’s supranational and agency borrowers are becoming ever bigger issuers in the international capital markets even as their historical missions appear to have been met and the banking and financial market to have matured enough to finance at commercial rates most of the lending risks the agencies assume. The debate as to whether these subsidized institutions distort or complement the capital markets continues unabated, as private lenders submit to capital adequacy directives that do not extend to the agencies. Alex Chambers reports.
  • Michael Walsh of hedge fund Kilkenny Capital Management talks to Helen Avery about the fund’s melding of information about medical innovators’ development and sales processes with finance theory to assess biotechs’ future value.
  • As summer draws to a close, bankers and investors are gearing up for the rush of new bond issues that traditionally hits the market in the last quarter. In the emerging markets it’s little different. The pipeline of deals out of Russia is strong, Asia is witnessing one of its busiest times of the year and Latin American issuance should pick up now that Brazil’s election is out of the way. Even in the Middle East, corporates are beginning to appreciate the benefits of the capital markets.
  • A management buyout, a large merger, an IPO, regional acquisitions and investment by Europe’s largest pharmaceuticals player – the past eight years have been anything but dull for the Czech Republic’s Zentiva. Company CFO Petr Sulc talks to Kathryn Wells about the challenges the company has faced and how it plans to finance further growth.
  • Grupo TMM, a Mexican transport and logistics company, is launching a $200 million securitization that will replace bonds that are relics of its troubled past. Juan Fernández, TMM’s CFO, tells Lawrence White how the firm stayed afloat and what he plans for the future.
  • More evidence of the chronic staff shortages still faced by Asia’s private banks came in September with news that UBS, the largest private bank in the region, has resorted to constructing its own purpose-built training facility for new recruits and existing staff to cater for the demands of its burgeoning Asia wealth management business.
  • Graduation day might be approaching for some of the larger companies listed on London’s AIM (Alternative Investment Market) but the sheer volume of competitors means some might not make the cut.
  • There have been plenty of compelling reasons to go short credit as an asset class this year. Investment-grade corporates are under threat from leveraged takeover by huge private equity funds; at the lower end of the credit spectrum, the easy availability of cheap credit even to risky B-rated borrowers has stretched leverage ratios to unsustainable levels.
  • IMF: Singapore welcomes the right sort of people
  • Eurozone countries are continuing to boost productivity vis-à-vis that in the US; consequently European equities are outperforming American ones.
  • Although benchmarking has a part to play in some areas, there is no single approach to best execution that suits all markets.
  • The possibility that the long end of the US yield curve might continue to invert has supported long-end issuance from international sovereign and supranational issuers.
  • Islamic investment and finance company Investment Dar will increasingly look to the sukuk market to meet its funding needs, according to its chairman and managing director, Adnan Al-Musallam, because of limited opportunities for bank finance in Kuwait.
  • As credit research is increasingly geared towards short-term trading ideas rather than fundamentals, there could be a dangerous dearth of information when defaults begin to rise.
  • Appointment expected to renew exchange’s focus on stagnant volumes in options contracts.
  • Qatari bank aims to become world’s largest Islamic player after IPO.
  • Zar Amrolia has been appointed global head of foreign exchange at Deutsche Bank. His promotion is one of a number of senior-level changes at the bank. Amrolia replaces Jim Turley, who had the wider role of head of global currencies and commodities. In turn, Turley has moved to become global head of the institutional client group, replacing Brian Reid, who is taking a sabbatical after 21 years in the industry. Sources say that Reid intends to return to Deutsche in 2007. Someone familiar with Deutsche’s structure described Turley’s new role as “huge”. He will have global responsibility for the bank’s institutional investors and hedge funds.
  • Markets used to move at the hint of change in the political landscape. These days, surprise election results seem to have little or no impact.
  • Further regulation on delivery needed, says consultant.
  • * Harry Culham update: 6 February 2008
  • In the article in the September issue of Euromoney entitled, "How