The covered bond market is developing in a way that few could have hoped for a few years back. Everywhere there is evidence of vitality. In addition to established relatively new sectors such as Ireland and the UK, issuers from Portugal, Italy, the Netherlands, Norway, Sweden and even Turkey are expected to join in. Alex Chambers reports.

US financier Carl Icahn’s audacious move on Korean tobacco and ginseng company KT&G has made great headlines and triggered apoplexy among Korea’s more xenophobic elements. Having amassed a combined stake of 6.72% with fellow investor Steel Partners, and pressed for a spin-off of KT&G’s ginseng division to return more capital to shareholders, Icahn has even mooted a takeover of the company. In March the Icahn camp finally won a board seat in a shareholder vote, the first time a foreign investor has been voted onto a Korean board against management wishes.

SuperDerivatives, an option pricing, trading and risk management company, has added a glossary of funky financial terms to its website.

In a sign that Kazakhstan is set to become increasingly visible on investors’ radar screens, a new investment bank has been set up there to offer a full range of corporate finance and brokerage services.

The regional real estate investment trust craze has finally sired a pan-Asian Reit, driven from Australia, and to be listed in Singapore. Despite its billing however, Allco Commercial Reit currently boasts just three assets: an office tower and shopping mall in Singapore, a stake in an office in Perth and a minority stake in an existing Australian property fund managed by the same group. That hardly qualifies for the title pan-Asian Reit but the proposed $300 million plus proceeds will certainly provide the capital to acquire more properties. The key to the success of the deal will therefore be whether investors believe the deal’s sponsor, Allco Finance Group, has the ability to find and close sufficient deals to warrant the fund’s pan-Asian billing.

The future for UniCredit and HVB’s merged operations in central and eastern Europe has been determined, with HVB’s subsidiary, Bank Austria Creditanstalt, set to become the sub-holding company for CEE operations within the UniCredit group.

More opco/propco deals are likely given rising real estate values and investor interest in secured debt.

Spanish bank forms a joint venture with alternatives specialist Vega to cater for institutional investors.

The UAE capital markets received a boost last month when National Bank of Abu Dhabi (NBAD) issued a Dh2.5 billion ($680 million) tier 2 convertible bond through a private placement. It is the first time this type of hybrid security has been issued in the UAE.

There is a consensus view that European equities are cheap and that M&A will continue to drive the market up and keep the liquidity flowing. This rosy vision is built on the assumption that earnings will remain strong, that global growth is re-accelerating, that the risk from inflation is minimal and that interest rates are therefore likely to remain low.

The volume of European equity capital market deals from the real estate sector has been growing strongly over the past two years and is expected to increase again this year.

Excellent market conditions, M&A, special situations and heightened insurance activity drove record subordinated supply in the first quarter; more deals are in the pipeline.

NIBC is planning a hybrid capital deal linked to the 10-year constant maturity swap rate. The deal, via lead manager Morgan Stanley, is fixed for the first five years at a whopping 8% before switching to the 10-year CMS plus 10 basis points. The coupon is capped at 8% with no floor. Such deals were extremely popular until a year ago but hybrid capital referenced to CMS coupons has fallen out of vogue since. The sector boomed during 2004 and the first quarter of 2005, with borrowers attracted by the highly aggressive all-in after-swap funding costs. But after the curve flattened many of these securities have traded at prices in the low 80s. With the curve as flat as it is, it seems the view is that the downside is now limited.

Ed Mizuhara has left Lehman Brothers where he ran the sovereign, supranational and agency syndicate, to join Credit Suisse. He will report to John Fleming, head of syndicate, who moved fast to find a replacement for Nick Dent. Dent resigned in February to join Merrill Lynch.

WaMu for covered bonds

Chief executive of the Chicago Mercantile Exchange thinks pressure is building for exchange-traded model.

The London Stock Exchange’s shareholders clearly have a lot to gain from Nasdaq’s bid for the market, especially if, as is widely expected, the New York Stock Exchange joins in the fray and pushes up the price even further. But what, if anything, users stand to gain is far from clear.

Are hedge fund databases trustworthy...

A report from Ibbotson Associates indicates that the returns reported in hedge fund databases are often much higher than they should be because of backfill bias and survivorship bias.

It seems no one has the right returns

HK euphoria hit by rapid short circuit

Bank is making use of its wide geographical experience to build cross-border expertise.

There has been a lot of talk about the use of computerized trading in foreign exchange. Discussions at a recent seminar in London suggest that there is real substance, not just hot air, behind the chat.

Rising personal bankruptcy levels and an uncertain economic outlook in the UK might suggest that non-conforming and sub-prime mortgage lending is not the smartest business line to jump into at the moment. Try telling that to the succession of new entrants now preparing to try their luck in this sector – one in which veterans might suggest that they are already 10 years too late.

As if investment banks didn’t compete enough with each other already, London-based employees of Barclays Capital, JPMorgan and Morgan Stanley couldn’t resist the opportunity to swap pinstripes for cricket whites in the chill of February for what has been billed the City Indoor Cricket Championship, held in Docklands.

“I see you have the same problem as in my country: prostitutes everywhere!”

“Oh, these are among the most toxic instruments we’ve created. And they’re absolutely a bull market instrument. In a bear market, it’s not a question of maybe losing just a percentage point. You can lose 10 points in a heartbeat.”

The first wave of easy returns on commodities has passed, while allocations continue to grow. Traditional players are having adapt to a much more liquid market, swimming with a new breed of investors and their active hedging strategies. Peter Koh examines the changes.

The EU’s emissions trading scheme and Kyoto’s clean development mechanism are succeeding in promoting renewable energy. But electricity utilities are turning out to be surprise beneficiaries. Peter Koh reports.

Economic pressures and government policies are driving investment inland, but many of the so-called second cities already boast powerful economies. Banks see a new frontier of opportunity. Chris Leahy reports from the cities of Chengdu, Wuhan and Qingdao.