RBC Capital Markets is building a European leveraged finance team.

"The private equity party is over," says Kevin Dolan, chief executive of $5 billion fund of hedge funds La Fayette Investment Management in London. The credit crunch has made it difficult for private equity firms to take companies private, and that is good news for activist hedge funds, he claims.

Chatting with Ajith Cabraal, the amiable governor of the Central Bank of Sri Lanka, in his lofty eyrie above Colombo, one could be forgiven for thinking that he’s presiding over some approximation of a Switzerland-sur-tropique. Although his Indian Ocean homeland is besieged by a civil war escalated by an ambitious president with an advancing personality cult, "things aren’t nearly as bad as they might appear on CNN," Cabraal says.

Local-currency debt markets in emerging economies are beginning to suffer from the credit crisis and broader global slowdown.

Credit Suisse and Gulf Capital, one of the region’s biggest private equity firms, have announced an agreement in principle to launch a strategic alliance focused on investing in the Gulf and Middle Eastern economies. Karim El Solh, chief executive at Gulf Capital, says: "Of particular help to us will be Credit Suisse’s expertise in leveraged buyouts, its global footprint, its financial strength and award-winning debt and equity franchises in the Middle East."

Measures to boost the competitiveness of Brazil’s exporters might well be fruitless.

Don’t confuse a lack of deals with inactivity; allocations to private equity are set to rise.

One characteristic that both the ABS and leveraged loan markets share – apart from having had a hideous time over the past nine months – is that fledgling indices for both (the ABX and LCDS/LevX respectively) have been subjected to the most testing market conditions in memory very early on in their development.

March 7

India’s nascent and relatively isolated financial markets have been spared the worst of the credit crunch but leading corporates are feeling the squeeze in other ways.

Deutsche Bank’s global head of equity and derivatives trading, Noreddine Sebti, is packing his bags and ditching the Big Apple for Hong Kong, in a move that the bank says reflects Deutsche’s increasing focus on the Asia-Pacific region, which it expects to overtake Europe in terms of equity trading this year.

As part of plans to boost Moscow’s position as an international financial centre, the Federal Financial Markets Service has announced plans to exempt investment in securities from taxation. The proposal forms part of a strategy document covering the period to 2012. If approved, the FFMS proposal will come into force in 2009.

More assets are yet to be hit in the credit crisis and, as leverage continues to fall out of play, liquidity will keep on drying up. Equity prices are bound to fall still further too.

Investors looking for attractive long-term return potential could do worse than look at bank stocks in southeastern Europe. That’s the conclusion of a recent report by Günther Hohberger and Gernot Jarny, banking analysts at Erste Bank in Vienna. Entitled South east European Banks: Boom or bust? the report looked at the banking sectors in Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Montenegro, Romania and Serbia, and concluded that overall growth rates for banks in the emerging economies of southeastern Europe versus the more developed markets in central Europe will be higher for the next decade at least.

But CDO managers are paying a premium, especially in the US.

The Dubai Multi Commodity Centre Authority, which is owned by the Dubai government, is buying a 4.99% stake in Shariah Capital. The two companies are also creating a joint-venture investment company that will develop Shariah-compliant commodity-linked investment products.

"Low sovereign default rate reflects buoyant global market conditions."

Moody’s Investors Service has assigned a Baa1 country ceiling for long-term foreign currency debt and Ba2 issuer ratings for the Republic of Montenegro. All ratings carry a stable outlook. "Montenegro’s ratings reflect the new country’s growing integration with the European Union and the financial stability afforded by the use of the euro as the official currency," says Kenneth Orchard, a Moody’s senior analyst. "Among Montenegro’s main rating constraints are its lack of administrative capacity and relatively underdeveloped judicial institutions."

If Japan’s property bubble has already expanded and popped, China’s might be close to bursting.

The stellar returns from reinsurance that lured in hedge funds in the wake of the 2005 hurricanes have dissipated. But this won’t deter managers with long-term strategic plans, reports Helen Avery.

Banco Santander in Brazil has named Banco Real chairman Fabio Barbosa as the new head of the Spanish bank’s businesses in Brazil. Barbosa will take up this new role when Banco Real is legally separated from ABN Amro. Gabriel Jaramillo, the current country head of Santander in Brazil, will "provide advice and support to the office of the chairman of Santander". Jaramillo’s post will be filled temporarily by Jose Paiva until Barbosa takes over the combined operations.

While investment bankers in the west expect a difficult 2008, counterparts in Asia cite the successful closing of buyouts, bond issuances and IPOs during the market turmoil as proof of the region’s opportunities. Lawrence White reports.

Alternative investments round up: Who’s smiling?

US investment bank Merrill Lynch has created a new infrastructure equities index, giving investors convenient access to the projected infrastructure boom in Russia.

Twelve Wall Street firms are in the early stages of developing a single trading portal alliance platform, operated by Nasdaq, for all 144a securities. The companies hope the platform will bring liquidity and transparency to the 144a market, which has been associated with unregistered, opaque trading.

Citi has apparently raided rival UBS and captured its global banks marketing team. Neither bank was able to comment at the time of writing but it is believed Citi hires include Bruno Widmer and at least five of his Zurich team.

The covered bond market has not behaved in the way investors had been led to believe it would. It’s time to realize that covered bonds are not the golden child of the bond family.

Investors in equity-linked structured notes are becoming increasingly concerned about counterparty credit risk, and are therefore becoming more discerning when it comes to choosing which institutions to buy their products from, report dealers.

Deutsche Bank is believed to have suspended two of its Italian FX sales team because of procedural irregularities. Sources say that Riccardo d’Antonio, the bank’s head of Italian FX sales based in London, and his subordinate, Santo Caristo, who was based in Milan, were told of the action in early March. Their suspension is believed to relate to a small loss incurred by one of their clients, which led to an abuse of the bank’s booking procedures. Deutsche and the Financial Services Authority, which held d’Antonio’s registration, decline to comment.

First Avenue Partners, a hedge fund advisory firm based in New York and London, is raising money for a new multi-strategy fund of hedge funds investment vehicle that will focus on Brazilian managers. The fund, which will be managed by Brazilian investment boutique Arsenal Investimentos, plans to raise $300 million.