Good reaction: Chemical company Ineos raised €870m on the high-yield marketThe European high-yield market was, for years, driven by leveraged buyout activity. Now corporates are accessing the market in their own right. So, is European high yield coming of age? Writer Joanne Hart
The Bracken column is named after Brendan Bracken, the founding editor of The Banker in 1926 and chairman of the modern-day Financial Times from 1945 to 1958.Over the past two years, financial institutions have received an estimated $1300bn in government-funded capital. This public-sector recapitalisation, coupled with extensive liquidity support, probably prevented the collapse of several banking systems worldwide.
As global investors try to work out how to best achieve safe and solid returns, The Banker spoke to a group of investment professionals to find out how they are plotting their course around emerging markets, sovereign debt concerns, asset allocation and worldwide growth trends. Edited by Anindita Ghosh
Poor harvest: but Banco Galicia, a leader in the agricultural sector, closed 2009 with a $301.5m profitDespite the twin threats of the worst drought to strike South America in decades and the continuing fallout from global financial crisis, Argentina's lenders have survived relatively unscathed. And now a debt swap offer could allow the country to access international credit markets. Writer Silvia Pavoni
KfW: one of a number of development banks using capital marketsFunding from capital markets has released development banks from the constraints of national economies' budgets to invest in a plethora of projects ranging from infrastructure, exports, business start-ups and the social development and growth of transition economies. Writer Silvia Pavoni
Fast and effective: KfW's January 10-year dollar deal had a healthy placement in AsiaDespite concerns about government budget deficits, Asian central banks continue to show strong demand for European sovereign bonds. But sovereign, supranational and agency issuers all need to focus much more on the careful execution of deals, and the syndication process has been speeded up because of volatile market conditions. Writer Michael Marray
Ikbal Daredia, managing director and head of capital markets and institutional banking at Unicorn Investment BankThe market for Islamic bonds, or sukuk, is expected to pick up in 2010, but its appeal will remain limited until the industry can agree a set of global standards and proper legal protection for creditors in case of default. Writer Charlie Corbett
Mohammad Daud Bakar, a Malaysian sharia scholarCross-border standardisation and rigorous product development processes will help to diversify the sharia-compliant financial markets. Writer Philip Alexander
With the economic environment still uncertain and markets often volatile, last year's deals demanded every ounce of tenacity and expertise available at corporates' relationship banks. The Banker's Deals of the Year are testament to those qualities.
Missing out: the Philippine Stock Exchange has lost major domestic listings to the Singapore ExchangeA move to fully integrate ASEAN capital markets by 2015 is proving a powerful driving force for pan-ASEAN economic integration. Writer Michelle Price
Bidding up: last month Thanachart Bank, 49% owned by Canada's Bank of Nova Scotia, saw off HSBC to win control of Siam City Bank in a government auctionOn going financial reform will not be held back by Thailand's political troubles, say Thailand's bankers. Neither portfolio nor direct investment inflows have been impacted, and the country's government is pressing on with two masterplans for the financial sector and capital markets. Writer Brian Caplen
Active in 23 countries, the UK’s Tullow Oil is now targeting the African market, a policy which took a huge leap forward in January with its $1.5bn purchase of Heritage Oil’s Ugandan assets, the funds for which were raised by an accelerated bookbuild that was completed in just over a week.
Andrew Burton, director in the liability management team at Credit SuisseThe successful debt restructuring by Ukraine's gas importer has eased short-term difficulties and offered hope for better government and corporate financial management in the future. However, the country's track record of disappointment in such matters still hangs heavy. Writer Philip Alexander
Danièle Nouy, secretary-general of the Banque de France's Banking CommissionDistinguishing between banks' funds and shareholders' equity has become increasingly difficult as the rise of hybrid capital instruments has introduced grey areas to the financial sector. Writer Charles Piggott
Moody's says defaults will peak this year, but distressed debt investors say the default trend has only just begun. Writer Suzanne Miller
Bank of America Merrill Lynch has had a rough year. Its CEO is being forced to retire, it is under intense regulatory scrutiny and senior investment bankers have left in droves. Yet it is holding up well in the league tables, and deal flow is looking pretty strong. Is Bank of America beating the odds and making a success of the acquisition? Geraldine Lambe reports.
Charlotte Conlan, head of leveraged finance at BNP ParibasThe secretive nature and narrow investor base of the European leveraged loan market meant it was hit harder and is taking longer to recover from the downturn than its counterpart in the US. There is a general consensus that Europe needs to open up its markets, improve transparency and introduce public ratings. Writer Charlie Corbett
Bank of America Merrill Lynch has had a rough year.
Its CEO is being forced to retire, it is under intense regulatory scrutiny and senior investment bankers have left in droves. Yet it is holding up well in the league tables, and deal flow is looking pretty strong. Is Bank of America beating the odds and making a success of the acquisition?
Geraldine Lambe reports
After a five-month standstill following Lehman's collapse last September, activity in Japan's samurai bond market is beginning to pick up and is taking a new direction, breaking the taboo on non-sovereign issues. Writer Charles Smith
Despite the downturn, share prices on the Istanbul Stock Exchange are soaring on the strength of the country's banks, as global liquidity and optimism return. Writer Metin Demirsar
Visible presence: Anheuser-Busch InBev, which owns a non-controlling 50% stake in Grupo Modelo, which brews Corona, was an early entrant to the debt markets this yearAfter a dismal 2008, the fixed-income sector has bounced back in 2009 thanks to government intervention steadying investors' nerves. The turbulent economic climate has favoured the low-risk bond market but, as revenues and deal volumes have risen, not all of last year's major players have retained their market shares. Writer Joanne Hart
Mark Goldstein, head of liability management practice for Europe, Middle East and Africa at JPMorganJPMorgan's head of liability management in London is building the business from the bottom up. He is a new arrival at the bank following the acquisition of Bear Stearns, creating a new team as the bank makes a foray into debt restructuring. Writer Philip Alexander
Trailblazer: Kookmin's covered bond earlier this year was the first ever issued out of Asia-Pacific
South Korea's Kookmin bank issued the first covered bond out of an emerging market earlier this year. It was lapped up by investors although its pricing has been questioned. But more importantly, is it the first of many other emerging market banks to look to covered bond investors for funding? Writer Joanne Hart
Issuer defaults and high exposure to falling Gulf real estate markets have cast doubt over the stability of Islamic capital markets, but a difficult year could help create a more established asset class in the future. Writer Philip Alexander
With the panic subsiding fast, Brazil's equity markets have staged an astonishing turnaround allowing canny investment banks to find their feet in the country again. Writer John Rumsey
 | In the 12 months since last year's Deals of the Year, the bad news just kept on coming. Venerable names disappeared; others remain but in a different guise. Yet despite the turmoil, the number and quality of entries this year was extremely high. The Banker's judges considered 416 deals from 102 banks worldwide, which made clear the growing strength of regional banks and were proof indeed that good deals can get done in bad markets. |
As the financial crisis enters its second year, The Banker invited the heads of financial institutions groups at major banks to discuss what needs to be done. Writer Charles Piggott
Horst Seissinger, head of capital markets at KfW
Asian central banks are still key customers for European issuers, even if their reserve growth is slowing. The move out of emerging market currencies and sterling is also giving a boost to euro-denominated issues. Writer Michael Marray
Carl Heinz Daube, managing director, German Finance Agency
Leading countries are poised to issue massive amounts of debt in an attempt to revive their flagging economies. But could this backfire if investors lose confidence, leading to worldwide panic? Joanne Hart investigates.
The worsening global financial outlook combined with a troubled economic environment at home have shaken Argentina’s government, and stalling over its debt negotiations has isolated the country further from international markets. Writer John Rumsey.
Mexico’s equity markets have succumbed to global malaise and recovery will depend less on commodity prices, as is the case for most of Latin America, and more on improved debt markets and a US recovery. Writer John Rumsey.
Stability and access to a wealth of natural resources makes Canada attractive for investors. Geraldine Lambe reports on the resulting buoyant activity in the country’s capital markets.
The former UBS banker talks about his solo venture to create BTG, a Brazilian trading house-cum-merchant bank based in São Paulo. Writer John Rumsey.
Falling international equity markets have swept Africa’s capital markets along with them. But the world’s poorest continent will continue to improve the sophistication of its exchanges. Writer Stuart Theobald.
Leszek Czarnecki, Getin Bank
One of the world’s fastest-growing regions during the boom years, eastern Europe became one of the major victims of the credit crunch as aggressive lending strategies turned sour. But there are still plenty of banks in a position to thrive. Writer Jan Cienski in Warsaw.
Susan Buckley, QIC’s managing director of active management
Dislocation and falling equity markets are breathing life into the Australian corporate bond market, while a falling cash rate and government-led initiatives are also resuscitating the once lifeless government bond market. Writer Kate Hage.
The heads of major international banks spoke to The Banker about the effects of the crisis, covering areas such as pay and incentives, strategies for funding, the implications for the free market orthodoxy and what opportunities for growth, if any, 2009 might bring.
While times are hard for many in the financial sector, one investor’s loss is another’s gain. The Banker speaks to five veteran investors, who advise that, as long as caution is applied, there has never been a better time to buy stocks. Writer Charles Piggott.
The world faces the worst financial crisis for decades, yet only one emerging market sovereign has so far entered default. But untested new issuers, political risk and the persistent lack of agreed restructuring mechanisms mean sovereign debt is still far from a risk-free investment. Writer Philip Alexander.
René Karsenti
If the market meets standards of best practice, there is less need for the authorities to impose draconian new regulations.
Gavin MacDonald, Morgan Stanley
It’s cold out there in the markets and in the freezing conditions, merger and acquisition activity has slowed to a virtual standstill. But the market is not entirely dead, and if necessity is the mother of invention, it can also be the mother of the M&A deal. Writer Joanne Hart.
James Nisbet, Vneshtorbank (VTB)
As the traditional giants of syndicated loans industry step back to lick their subprime wounds, a new breed of lender is emerging. Banks from across the emerging markets that were historically recipients of syndicated loans are hoping to snap up business that was formerly the domain of the big international players. Writer Charlie Corbett.
Quentin Nason, Deutsche
The US has shown the way with special purpose vehicles that could prove a safe bet in today’s volatile market. Joanne Hart reports.
Nick Morgan, RBC
A wave of equity issuance and market distaste for complexity suggest that hybrids might be falling out of fashion as a source of bank capital in Europe. But Philip Alexander finds that any decline is likely to be temporary.
