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October 2006

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LATEST ARTICLES

  • The landscape of the Italian banking market has been completely redrawn over the past 12 months but consolidation remains work in progress.
  • 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.
  • As a consequence of Merrill Lynch’s revolving door policy in FX, Steve Kemp has resigned from the Foreign Exchange Committee. Kemp, just one of the many global FX heads Merrill has had over the past decade, left the bank this summer. Merrill has had few representatives on the Federal Exchange Bank of New York-sponsored committee, which is seen as a prestigious role in the market. Members have to be invited on and there is no guarantee that Merrill will get to sit at the top table again.
  • The British Bankers’ Association’s Credit Derivatives Report 2005/06 was unveiled at the BBA’s third annual credit derivative conference held in London on September 21. In 2004 the BBA survey predicted that the global credit derivative market in 2006 would be $8.2 trillion but it is actually $20.2 trillion.
  • 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.
  • Enormous energy is going into the creation of new Shariah-compliant finance structures for eager Middle Eastern corporates to fund themselves by appealing to Islamic investors and their growing pool of money. Every market participant expects the surging Islamic finance sector to keep on growing fast. But a key element is missing. Secondary trading in these instruments is severely limited. Sudip Roy suggests that for the recent increase in primary market activity to be sustainable, more attention needs to be devoted to trading infrastructure.
  • Losses from trader error in December should have been reversible, securities house claims.
  • Leading US private equity firm Darby Overseas Investments is poised to begin pre-marketing on a global emerging markets fund that will have a heavy focus on Asian investments.
  • One hedge fund blew up and lost a reported $400 million after getting caught short. The other lost $4.5 billion after finding itself long and wrong. At first glance, the only connection the two companies have is that both were hedge funds, and both were punting in the highly volatile natural gas market.
  • JPMorgan Cazenove has moved quickly to replace David Sismey, who left for Goldman Sachs in August with Chris Babington, who has worked at Deutsche Bank for three years. He is an experienced FIG originator, previously at BNP Paribas and Paribas before the merger. He joins JPMorgan Cazenove as a director reporting to John Mayne, head of debt capital markets. He will look after northern Europe, with a particular focus on the UK. “We are pleased to have Babington joining us. Clients like him and we were very fortunate that he was looking for a change,” says Mayne.
  • For 11 months the European Central Bank has been engaged in a gradual tightening of monetary policy or, to use the more nuanced language of ECB president Jean-Claude Trichet, a “progressive withdrawal of monetary accommodation”. The financial markets and commentators have learnt to read quite accurately the code words – such as “strong vigilance”, “vigilance”, “continuing to monitor closely” – used by the ECB to signal what its next move is likely to be.
  • First Fiji, now the Seychelles. Suddenly, all those long hours that originators spend on planes en route to visit potential clients seem less tedious.
  • 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.
  • “A private equity play in China is exactly that – a private equity play. The price may go up or down, but that’s not a China strategy”
  • Bavarian structured finance banker's national dress accidently arrives in suitcase packed for glittering awards do
  • “When you talk about leasing, everyone thinks you’re talking about cars. My mother-in-law thinks I sell cars for a living”
  • The gap between the top two and their closest rivals continues to increase, according to results from our recent survey on international cash management.
  • 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.
  • Do superheroes need financial advice, and if so, how do you go about giving it?
  • Central bank governor emphasizes the resilience of the financial system at a time of crisis.
  • Barclays Capital has identified a budding mortgage-backed securities market as one of the key reasons for its decision to open an investment banking and broker-dealer business in Mexico. The UK bank started operations in Mexico last month with $100 million in capital. Barcap also hopes to take advantage of the fast-growing local capital markets, as more companies seek to raise money through high-yielding peso-denominated bonds.
  • Arab Bank has bought a 50% stake in Turkey’s MNG Bank, as part of its expansion plans. MNG Bank was established in 1991, and offers retail banking and capital markets services through 11 branches across Turkey.
  • 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.
  • More than two years after the enlargement of the European Union, many large equity investors remain convinced that the combined equity markets of central and eastern Europe are too small for them to invest in, despite a combined equity market capitalization of €211 billion at the end of 2005.
  • Hedge fund rating is a noble goal but Moody’s and S&P’s approaches fail to fill the bill.
  • 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.
  • The return of hard underwriting on recent bond deals underscores how mundane and risk-free the business had become.
  • "The bosses of Europe’s big three stock exchanges, the LSE, Deutsche Börse and Euronext, deserve to have their heads knocked together. They appear to have let their egos get in the way of getting together and forming a genuine European powerhouse."
  • Sovereign liability management exercises continued apace last month in the region, with Brazil, Colombia and Uruguay executing either debt swaps or local-currency deals. Strong market conditions are encouraging sovereigns to clean up their yield curves or reduce their foreign exchange exposure in favour of local currency. Brazil issued a R$1.6 billion ($750 million) global bond denominated in reais. It was the sovereign’s second such deal. Colombia followed with a $1 billion offering of 2037s. Part of the proceeds will be used to buy back up to $700 million of global bonds. Finally, Uruguay entered the market with a $400 million-equivalent inflation-indexed peso bond.
  • Government’s attempt to develop venture capital industry lack clarity.