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.

Unbundling of commission regulation will increase independent data provision.

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

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

Research shows an increase in abnormal stock trading in the UK despite recent FSA clampdown. Some of the irregular share price movements may be indicators of insider trading.

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.

Deutsche Bank has hired from a private equity firm to expand its presence in the rapidly growing real estate, gaming and lodging sector in Asia. The bank has hired Matthew Mrozinski from Colony Capital, the private equity firm that specializes in real estate investments. There, Mrozinski was vice-president of acquisition and head of Asia-Pacific capital formation. In this newly created role at Deutsche, Mrozinski will report to the bank’s head of M&A for Asia, Douglas Morton, but will also be responsible for the financings of real estate deals.

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.

Tough regulations hold back trade volumes.

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

Gulf of credibility baulks Aussie banker: Australian banker attempts to avoid jail time and earn enough to repay embezzled funds by taking a position at the National Bank of Kuwait.

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.

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.

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.

52 The percentage growth in Lehman Brothers’ equities business, the investment bank’s fastest-growing sector. After slashing costs and investing in more automated trading during the lean bear market years, investment banks are now making more money from equities than ever before.

While rivals’ share prices roar ahead, Citigroup’s languishes. Investors love stocks that are easy to understand. So is it time for Citi to develop a clearer strategy?

WaMu for covered bonds

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

Investors were given a faint hope that Yukos might yet escape bankruptcy proceedings last month when Russian oil company Rosneft agreed to acquire $482 million of outstanding debt that Yukos owed to a consortium of international lenders.

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

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

After its success with the sale of BCR late last year to Erste Bank, Romania’s government seems determined to press ahead with the sale of one of the few remaining banks of any size in central Europe, CEC. The final bidding deadline for the 85% stake is April 26, with six European banks – National Bank of Greece, Monte dei Paschi di Siena, Dexia Bank, EFG Eurobank, OTP Bank and Raiffeisen Bank – having shown an interest by mid-March. The decision to go ahead with the sale surprised many bankers, given that the government had an alternative proposal to restructure the bank over two years to boost its value, with some suggesting until recently that CEC might never be sold.

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.

It seems no one has the right returns

There are high expectations for European public-to-private deals this year but there is much uncertainty in the sector about how many will actually make it to market

Treat your back-office staff well lest they take umbrage and run away to a hedge fund.

The low-key business of advancing tiny loans to the poor in developing countries is not the most obvious starting point for a new asset class on Wall Street. Microfinance has always struggled to develop because of a lack of access to financial markets. But the consistent profitability of microcredit companies is turning heads, according to Acción International, a non-profit organization that promotes small lending programmes worldwide. Its affiliates extended loans of almost $2 billion last year. “Microfinance as an industry is becoming a separate asset class for Wall Street,” says Acción International’s president, Maria Otero.

Finance minister’s resignation leaves investors feeling cautious.

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.