The once-unthinkable news that super-senior CDO risk could be vulnerable to downgrade has been very bad news for the monoline guarantors as well as the banks. Most vulnerable to write-downs as a result of wrapping these tranches is Ambac, with $29.2 billion exposure to US ABS CDOs. MBIA has $19.3 billion and XLCA $16.1 billion. However, Moody’s reckons that the likelihood of any of these firms facing a capital shortfall is unlikely (MBIA) or moderate (Ambac and XLCA). The rating agencies deem Natixis-owned CIFG to be at the greatest risk of facing a capital shortfall. The firm has a $4 billion exposure to the CDO market. Of the big four firms, FSA is the most comfortably positioned, with a mere $364 million exposure to US ABS CDOs.

Japan’s Nomura booked a ¥73 billion ($621 million) loss from its residential mortgage-backed securities unit as the company announced its exit from the US RMBS market. The bank described the move as part of a general reduction in its US activities that will cut the number of employees by 400 to 900. Although the loss is small in comparison with the billion-dollar losses at some American banks, it is the largest yet reported by a major Japanese institution as a result of the sub-prime problem. In a statement, Nomura president and CEO Nobuyuki Koga acknowledged "disappointing results" in the US RMBS market but said that the bank had "moved decisively to deal with the issue and had avoided further and protracted losses by taking firm and immediate action".

A study by Integrity Research Associates shows a disparity between research conducted by traditional buy-side firms and their hedge fund counterparts that could explain the latter’s outperformance.

HSBC’s global headquarters in Canary Wharf hosted an entirely different type of journalist last month at the press conference announcing the British bank’s sponsorship of the British and Irish Lions for their 2009 tour of South Africa.

The proliferation of sovereign wealth funds is an opportunity and challenge for investment banks and asset managers.

Credit card ABS has so far escaped contamination by sub-prime. Some might worry that volumes are up, but key metrics are strong. If this market does well, it could be a template for others. Alex Chambers reports.

With little to choose between the capabilities of covered bond departments, issuers are granting mandates for different reasons.

The sixth annual report on global investment management by KPMG has revealed that further convergence between hedge funds, private equity companies and long-only managers is to be expected.

Markit purchase of IIC could herald creation of a global credit derivatives index.

Citi, Bank of America and JPMorgan will fail to persuade several banks to participate in the initial idea of a master-liquidity enhancement conduit.

There’s a lot to be said for a monetary union for north America.

Latin American banks are well positioned to endure the credit crunch and a potential global economic slowdown, according to regional specialists. So far, the banking system has weathered the storm and analysts expect it to continue to do so.

Bank of New York Mellon is to acquire Brazilian asset management company ARX Capital Management. ARX has $2.6 billion in Brazilian multi-strategy, long/short and long-only investment strategies. Morgan Stanley has added to its growing slate of hedge fund investments, and has bought a minority stake in Traxis Partners, a hedge fund founded by former employee Barton Biggs. And RAB Capital has bought a 20% stake in Tokyo-headquartered hedge fund firm Prestige Asset Management. Last month it acquired Hong Kong-based hedge fund Pi Investment Management.

Two of Kazakhstan’s leading companies are poised to fully test investor sentiment towards the central Asian state in the coming weeks, with big transactions in the debt and equity markets.

Asset-backed securities not troubled by US sub-prime problems.

The hoarding of cash by banks is understandable but dangerous.

A study by Ibbotson Associates of the performance of more than 4,000 funds of hedge funds reveals that the smallest 25% under perform the other 75% of funds by more than two percentage points annually because they deliver lower alpha. However, the very largest 5% of funds of hedge funds also slightly under perform other large funds because of capacity constraints.

Primary debt issuance out of Latin America is expected to pick up at the beginning of next year, according to bankers who work in the region.

New regulations are always unpopular with bankers struggling to keep on top of increasing numbers of oversight and compliance rules. The Markets in Financial Instruments Directive (Mifid) is proving particularly unpopular with those working in the equity-linked structured note market, who say it is simplistic in its approach to derivatives-based investments.

AUM may be still in its infancy but the quality of managers is appealing.

Jim Turley is planning on taking a sabbatical from his role as global head of institutional client group at Deutsche Bank. Insiders at the bank say that Turley is keen to become a rugby coach. Turley, the bank’s former head of global currencies and commodities, is unusual in being both highly regarded and extremely well liked. It was during his tenure that Deutsche emerged as the global FX powerhouse it is today.

The scramble for Africa just became institutionalized. Anyone who thought that the latest round of deals in Africa – led mainly by the Chinese – would be limited to the commodity sector had better revise their views. Two developments in the past month show that the Chinese are willing, even desperate, to take stakes in financial institutions on the continent. All indications suggest that direct investment inflows into Africa, some $39 billion in 2006, according to Unctad, the UN trade and development agency, are likely to be much higher for 2007. Some analysts expect the figure to hit $100 billion by 2010. The first deal, announced on October 31, is a partnership between Nigeria’s United Bank of Africa and China Development Bank. Details on the level of credit available to UBA are not being disclosed but it is understood to be significant. UBA feels it has stolen a march on its rivals and done the region a favour as well. "This partnership will contribute to strengthening of the economic cooperation between China and Nigeria and indeed the sub-region," says Tony Elumelu, chief executive of UBA. "The long-term funding gap in Africa is the highest in the world and this partnership will seek to close that gap."

Alfa Bank has become the first privately owned Russian bank to raise overseas funding in the post-credit crunch era.

Without foreign institutional investors, Saudi Arabia’s equities market still has a long way to go before it can match the strength and sophistication of the Kingdom’s leading companies. But a more active foreign presence is expected. Dominic O’Neill reports from Riyadh and Jeddah.

Pakistan has become a country that generates two types of stories: one positively glowing, extolling the recently healthy financial markets and rising foreign direct investment; one wholly negative, after the country’s latest skirmish with one or more of rising militancy, dictatorship, government strife or old-fashioned bankruptcy.

Despite all the jawboning over the past few years about succession planning, banks seem woefully unprepared if they are forced to jettison a flailing chief executive because of cauldron-like shareholder pressure.

Deutsche Bank has hired Dierk Reuter as its new global head of e-commerce and algorithmic trading. Reuter was previously a managing director at Goldman Sachs in its equity algo business, although he also has extensive knowledge of FX. He was seconded to FXall by Goldman Sachs as its original chief technology officer when the multi-bank portal launched.

The world’s most profitable chemicals company, and possibly soon to be its biggest, has ploughed ahead with big expansion plans despite the credit crisis, making more use of Islamic and local capital markets. Dominic O’Neill talks to Sabic’s CFO, Mutlaq Al Morished.

‘Riskless’ exposure comes back to haunt banks

The Ibero-American summit in Santiago, Chile, on November 10 ended on a heated note after the Spanish king told Hugo Chávez, the president of Venezuela, to "shut up".