As it looks to keep pace with rival Banco Santander, Spanish bank BBVA is setting its growth sights on the Hispanic market in the US - at the outset Mexicans in California and Texas - rather than Europe.

Innovation on the part of issuers and their bankers along with robust risk appetite from investors shaped the capital markets in 2004.

With two presidents overthrown by popular unrest since 1997 and a debt default in 1999, politically volatile Ecuador has largely been exiled from international capital markets in recent years, unable to tap into investor demand for high-yielding emerging-market paper.

The message to emerge from Euromoney's tenth annual CEE conference was that investors are increasingly attracted to local-currency bonds as a source of returns in a general spread-tightening environment.

The dinosaurs that were the old US futures exchanges are extinct. CBOT's and CME's changes, in response to upstart rivals such as Eurex US, may be paving the way to consolidation.

The productivity gap between the US and Europe is not as wide as is commonly believed. And eurozone productivity is growing, with more of that gain accruing to investors than to workers.

China's cuisine is among the world's finest but its wine industry lags far behind, a fact that new Hong Kong IPO candidate Dynasty Fine Wines Group has been striving to change since it started producing wine 25 years ago. Judging by current standards, the Tianjin-based company has some way to go, despite having an illustrious equity partner in Rémy Martin.

Schroders celebrated the success of its third year of sponsorship of the London Boat Show with a James Bond party. With vodka-martinis, casino tables and Bond character lookalikes amid the million-dollar yachts it could easily have been mistaken for a Bond film set.

Arsenal football club is in discussions with the Royal Bank of Scotland to issue a new £260 million 30-year secured bond to help finance the construction of its new £357 million stadium.

At least one brokerage firm in the US didn't have a Christmas party. Not that any of its employees are complaining.

By Camilla Palladino

www.breakingviews.com

www.breakingviews.com

When a country really needs financial help, it turns to the community of nations. Iraq, for instance, burdened by unsustainable foreign debt, got an agreement last year to wipe out 80% of its Paris Club debt. Indonesia, after the December 26 tsunami, got $3.3 billion of debt relief from the Club within a few weeks of the disaster.

Citigroup regains top spot in our poll of polls from Deutsche Bank, which had nudged it back into second place last year. Hard data from the league tables confirm customers' votes that put Citigroup at the top in capital raising and cash management.

Much of the action in financial markets this year will centre around private-equity fund managers. They are leading the bidding on new acquisitions, breaking records for new fund raising and seeking exits. But if it is a good time for them to sell, how can it also be a good time to buy? Delivering returns is the challenge.

The completion last month of the first cash-settled forward trade on EU CO2 allowances is a big advance for the European emissions trading market (EU ETS). GreenStream Network (GSN) brokered the trade between counterparties Dresdner Kleinwort Wasserstein and Sampo Bank of Finland.

The tsunami disaster prompted a generous debt payment moratorium proposal from the G7. But, factors such as debtor reputation and comparability came into play, taking the shine off the good deed.

Issues by sovereigns, sub-sovereigns and agencies tend to do well at the start of the year, mopping up high January cash balances. But in 2005 quality issuers have done even better than usual, raising hopes of a good year.

Small-cap companies outperformed their bigger cousins again in 2004, a trend that a joint ABN Amro and London Business School study released last month finds consistent with results over the past five years worldwide and over the past 50 years in the UK.

Corporates from Colombia have a hard time in the international capital markets. However many miles they rack up meeting investors, the country remains best known for an infamous export and the cartels that produce it.

The Bush administration would have it that you're either with it or against it on Social Security reform. The Democrats may have fallen for that but Henry Blodget reckons there is a middle way.

It has been a dismal start to Hong Kong's trading year, with the Hang Seng off 1,000 points from the year-end. As the market looks increasingly sick, even the red-hot M shares (Euromoney January 2005) drawing on Macau's casino boom have started to feel the chill, with most of them sharply down.

Foreign exchange technology is set to take another step forward when the Chicago Mercantile Exchange's electronic foreign exchange (eFX) markets go live on Reuters. The agreement marks the first major linkage of sell-side traders in the interbank FX market to CME eFX futures markets, where hedge funds and other buy-side participants play a major role.

The approval of Turkey's candidature for EU membership is just the start of a decade-long process, much of which is likely to be painful, that is set to revolutionize the country's economy and society.

The increasing complexity of financial instruments, markets and institutions is a worry for regulators and investors. Simple, intuitive ways are needed to make risk transparent. The value-at-risk measure, although sometimes criticized on theoretical grounds (see Markus Leippold in Euromoney November 2004), has established itself as the benchmark. Christopher Lotz and Gerhard Stahl explain how regulators approach the subject of market risk management and use VaR as one among many tools.

The European High Yield Association is celebrating its fifth birthday this year under new management. Bryant Edwards, an American corporate partner in the London office of US law firm Latham & Watkins, became its new chairman last November. It has also appointed four new directors: James Amine, co-head of global leveraged finance at CSFB; Eric Cap, managing director of high-yield capital markets at JPMorgan in London; Tim Flynn, London co-head of leveraged finance at Goldman Sachs; and PricewaterhouseCoopers partner Michael Berkowitz.

Mladjan Dinkic, Serbia's 40-year-old minister of finance, says governing a country when you don't know where its borders are can be challenging. ?This is the biggest problem for us,? he says. ?It's the biggest problem for us joining the EU too.?

Active Asset Investment Management (aAIM) is bringing bricks and mortar to rock and roll stars with a fund that launches next month. The investment company is hoping to raise equity for a £400 million commercial property fund.

More inflation-linked bonds from non-sovereign European issuers could be a feature of the debt capital markets in 2005 as the inflation derivatives market grows.