Banks’ credit research departments are readying themselves for a turn in the credit cycle towards a higher level of defaults and volatility. Florian Neuhof reports on the state of play.

Mexico has long considered itself a groundbreaker in international debt capital markets. But its latest attempt to make history fell rather flat: it was downsized by $2 billion in the face of weak demand for the new debt part of the deal.

Plans by International Index Company (IIC) and Eurex to launch a CDS future have yet to resolve the question of how cash settlement will be achieved on reference entities that have defaulted. But once this problem has been solved, the initiative should open up the CDS market to investors that have so far been blocked from trading the OTC market.

Unbundling of commission regulation will increase independent data provision.

Worth only the paper it’s printed on

US growth companies faced with the increased cost of listing at home are among foreign issuers seeking a home on London’s junior market.

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.

Bank telecom advisory fees are on the up, but that won’t last for long.

CLO facilitates the provision of loans to the world’s poorest citizens.

The US hybrid market has suffered a setback following a recent NAIC ruling.

An intimate knowledge of the market, a good track record and a favourable cost basis – what more could a credit rating agency ask for?

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

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.

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.

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

It’s a good job that many US investment banks have had such a strong first quarter. They need the cash to keep the regulators at bay.

Euromoney meets the chief executive of a specialist financial services firm recently bought out by management. Such deals are rare in a sector where most participants are inherently leveraged through their day-to-day operations. Is the firm’s capital structure not now rather strained? Not at all, says the CEO. It could ask its backers or other third parties for more money tomorrow and get as much as it wanted. Raising money isn’t the problem. Almost anyone can get funding right now. Identifying the right investments to build the business – that’s the tough part.

Ultra-rich investors are seeking out higher-volatility hedge funds. But they will be hard to find until strategies catch up with demand.

Private-sector company prepares businesses for IPOs.

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.

The US housing boom is set to collapse, with adverse effects on domestic consumption. This, unlike the slowdowns in Australia and the UK, will have a marked effect on global growth.

5 The number of years it has taken the S&P 500 and the FTSE100 share indices to reach levels last seen in 2001. On March 15, the S&P 500 crossed the 1300 mark for the first time since May 2001. This is still about 15% below the index’s March 2000 all-time high. The FTSE 100 crossed the 6000 mark for the first time since March 2001 but is still almost 1,000 points shy of its December 1999 all-time high.

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.

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.

Argentina's default $800 million more than commonly assumed.

Banking sector consolidation continues in Georgia, where Bank of Georgia recently acquired its ninth-largest competitor, IntellectBank.

Tough regulations hold back trade volumes.

Joaquim Levy, Brazil’s treasury secretary, tells Lawrence White how the sovereign is restructuring its debt management profile.

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.

“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.”