Maarten Henderson, CFO of Dutch telco KPN, ended 2002 on a high note. On December 5, Standard & Poor's upgraded the company from BBB- to BBB, praising its deleveraging efforts. It had cut net debt from e22 billion at the end of September 2001 to e13.9 billion in just a year and had improved operational performance. By December 30, Henderson was celebrating the birth of a new baby daughter. And 2003 also got off to a promising start when, at a time when Deutsche Telekom was being punished by a two-notch downgrade by Moody's in January, the rating agency changed the outlook on the KPN's Baa3 rating to positive.

For years companies leveraged up to boost shareholder returns. When the boom burst the disappointment of stockholders was as nothing to the wrath of creditors who have pushed companies to the brink. Some have pulled back, others are still teetering, only a few have steered well clear of trouble.

Some points to consider before you dabble in the yellow metal.

ABB has had a rough 12 months. The Switzerland-headquartered power and automation technologies conglomerate was faced with the worst operating environment for its businesses in 20 years. It was making heavy losses and was also saddled with an increasing asbestos liability at US subsidiary Combustion Engineering.

Bear markets breed their own types of deals - balance sheet repair, restructuring, liability management, monetization of illiquid assets, securitization, opportunistic acquisitions. The pace and intensity of such deals may vary between the long hard slog and sudden bursts of activity, but companies and bankers that do well in them tend to share certain characteristics: a refusal to accept defeat, creativity that may be inspired by desperation, and a determination to deal with complexity and hold their nerve. Banks must sometimes underwrite risks they would rather not take, just to complete deals.

The IMF has come under heavy fire for its decision last month to roll over $6 billion it lent to Argentina. The republic has failed to implement or even promise any of the reforms the IMF considers necessary, say critics, and the Fund has lost credibility by caving in to the Argentines' blackmail tactics.

Cades, the state-backed agency set up to pay off France's social security debt, has sizeable yearly funding needs and prides itself on the quality and regularity of the information it provides to the market.

Fixed income

Executives at the Chicago Mercantile Exchange have pulled off what could turn out to be the most important coup in the institution's recent history. It's not the launch of their IPO in December, although that must count as a great success in itself given both the sheer effort of transforming from a mutual to a public company as well as going public in the toughest new issue market for decades.

Stock markets started 2003 in a relatively buoyant mood. The view seemed to be that the world economy would come out of a soft patch, that the Bush administration would deliver tax cuts that sustained US consumer spending and that war in Iraq would go smoothly and quickly, slashing oil prices.

Lang Kwai Fong - the area in Hong Kong where you go to drink before you hit the really seedy bars - used to be a good gauge of how happy and confident expatriates were. According to an Australian banker, in the 1990s it was busy during the good times and quiet during the bad. These days, though, expats have changed their drinking habits.

The days of large foreign investment flows to Latin America appear to be over. Companies and countries in the region are therefore going to have to find new ways to achieve sustainable growth.

Sovereign borrowers

Sovereign borrowers

Managed futures, a strategy used by commodity trading advisers, produced the highest returns of any strategy in the CSFB/Tremont group of indices in 2002. By betting on increases in the prices of gold and oil, and on the depreciation of the dollar, commodity trading advisers produced returns of 18.33%.

South Korea

Sovereign borrowers

M&A

Ukraine

Despite the continuing weakness of equity markets, institutional investment in hedge funds has grown only slowly.

The European Investment Bank (EIB) has achieved a breadth of funding sources that few borrowers can rival. It is the only supranational issuer with benchmark programmes in three currencies - euros, dollars and sterling - and it is also the largest non-resident borrower in central and eastern Europe. Rene Karsenti, EIB's director general of finance, says: "We have a strategic presence in the accession states as we lend in these countries. It's also important to contribute to the development of these local bond markets in the run-up to EU accession, as we did with Portugal, Greece and Spain before their own accession."

Sovereign borrowers

Middle East

Investment banking

Japan

Many of the futures commission merchants favour a model for the US futures business that is suspiciously similar to that employed in the US options market. It's a model, conversely, that the futures exchanges are keen to avoid, as they have seen what effect it has had on the Chicago Board Options Exchange.

Toyota Motor Credit Corporation (TMCC), the wholesale and retail financing company that supports Toyota's North American sales activities, is unique among the big automotive companies' captive financing vehicles. It has a triple-A rating from Standard & Poor's and Aa1 from Moody's, far superior to those of its big three competitors, Ford Credit, DaimlerChrysler Financial Services and GMAC, the highest rated of which, DaimlerChrysler Financial Services, is on a low single-A.

India inched its way closer towards full convertibility of the rupee early last month when finance minister Jaswant Singh unshackled foreign investment by Indian companies, mutual funds and investors. However, the fine print shows that the old control mindset of the Indian authorities has not changed.

General Hilmi Ozkok, Turkey's army chief of staff, last month expressed his displeasure at prime minister Abdullah Gul's interference in army policy towards Islamist officers. In a speech he made at the military's annual party for the media (Islamist journalists are not invited) Ozkok said Gul's attitude would "indubitably encourage those who got mixed up in recidivist [meaning Islamic fundamentalist] activities".

Sovereign borrowers