Raising money in global financial markets in 2005 was not always easy. But equity returns were strong and global credit survived a volatile year; it was also a notably profitable year for investment banks as M&A boomed again and the fees came rolling in.

Japanese companies are now creditworthy and the banks are recapitalized but neither side seems keen to enter into loan transactions. But companies can see the long-term value of establishing access to capital markets. And lenders are keen to repackage and redistribute credit risk in new ways and define a new relationship with corporate customers. Peter Lee reports

Foreign banks are lining up to follow RZB and BNP Paribas’ lead by acquiring Ukrainian banks. The next to be sold looks set to be Ukrsotsbank, which oligarch Viktor Pinchuk has been looking to sell since the Orange Revolution of December 2004. Erste Bank, OTP, Société Générale and Intesa are all looking to buy the bank, which is Ukraine’s fourth biggest by assets. Ukrsotsbank has attracted foreign banks’ attention thanks to its strong growth in retail lending, with its gross consumer loan portfolio growing by 58% last year.

UK breakfast cereal maker Weetabix will be one of the first companies this year to test the market for leveraged recapitalizations. The deal, expected to come to market in the next few weeks, will be lead arranged by JPMorgan. It takes out the £450 million ($803 million) leveraged loan backing the £642 million buyout of Weetabix in 2004 by private equity firm Hicks Muse Tate and Furst.

In the first of a regular series of columns, John Arrowsmith casts light on what at first sight appears to have been a sudden volte-face on interest rates by the European Central Bank.

Despite much hype and enthusiasm, the DIFX, Dubai’s new international stock exchange, has got off to rather a slow start.

Vanilla deals fell out of favour in equity-linked issuance in 2005, with highly complex, structured transactions building unprecedented dominance. Despite higher volatility levels than in 2005 and a very promising M&A outlook, this trend is likely to continue in 2006. Peter Koh reports.

Even after the stock market’s dramatic climb in 2005 and sudden sell-off in mid-January, a wall of money is heading into Japanese equities, reports Peter Lee. Securing greater retail investment is seen as crucial to the reconstruction of Japan’s entire financial system. Privatization, new-economy IPOs, J-Reits and private equity exits will keep the investment bankers busy until the big blue chips are ready to issue once more. In the meantime, can someone please fix the TSE’s problems?

Behind Japan’s headline economic restructuring, a gradual but fundamental shift in Japan’s corporate ownership is taking place. A growing band of fund managers is encouraging companies to change; in some cases forcing them to do so. In the process the managers are making a tidy sum. Chris Leahy reports.

The Russian real estate market is one of the best performing in the world. Foreign capital is lining up billions of dollars to invest in it. But there’s a problem – it has to compete with the billions in local capital generated by oil sales. Julian Evans reports.

Like so many other aspects of Japan’s financial system, its pensions schemes are paying for the sins of the past and struggling to pay for the future. Existing reforms do not go far enough, says Chris Leahy, and flirt dangerously with the country’s future prosperity.

Several emerging market countries have discovered that oil is a bane not a blessing, destroying domestic development. The current crop of oil champions may have stabilization funds, but Theodore Kim explains how things can still go wrong.

A repricing of capital is coming soon. But advances in risk management suggest it will be a prolonged process, not a quick flip into deflation.

Risk is pervasive but arguably no more so in emerging markets than elsewhere. And returns there at least take account of it and add a bit extra, says Euromoney’s new fund management columnist.

UK

Euromoney’s annual poll of polls shows that universal banks still dominate overall because of the breadth of their business. But firms such as Barclays Capital, Merrill Lynch and Société Générale are scoring notable successes in their chosen areas. Clive Horwood spoke to their heads of investment banking.

Lebanon

Japan’s recent M&A boom is set to accelerate, driven by aggressive upstart companies, foreign and domestic private equity buyers and hungry overseas corporations. Now they have restructured, healthy Japanese corporations have plenty of domestic consolidation to do. M&A is becoming an increasingly accepted management tool. A handful of leading Japanese companies will use it to cement global leadership. Peter Lee reports.

With negotiations for Turkey’s entry to the EU under way – albeit with a long lead-in time – completed privatizations, foreign direct investment and domestic deal-making are growing apace despite continuing bureaucratic hold-ups. David Judson reports.

Peter Weinberg, former head of European investment banking at Goldman Sachs, will join former Morgan Stanley star banker Joseph Perella in his as yet unnamed investment banking boutique. Perella left Morgan Stanley last April during the battle over the leadership of the firm and soon after was sole adviser to MBNA on its $35.8 billion sale to Bank of America.

by John Ferry

The biggest LBO club deals of 2005 will soon be surpassed.

Those banks distributing goodies in the hope of influencing the poll (against the rules, we hasten to add) might do well to remember that clients are often an ungrateful bunch. Apparently, one Japanese client of a UK clearing bank complained about the iPod Shuffles it received for Christmas. It was not the fact that iPods are made by one of its competitors that caused the problem. No, it was the fact that the Shuffle is at the bottom of the iPod range.

Equine expectations

Venezuelans woke up on Christmas Day to find that Santa Claus had given them a brand-new toy: a Hugo Chávez action doll. In fact the doll was Venezuela’s best-selling toy this Christmas.

With India’s aviation sector already hopelessly overcrowded, consolidation started in January when Jet Airways India and Sahara Airlines announced an agreement for Jet to acquire Sahara. Although the deal is subject to a confidentiality agreement, the companies announced that the acquisition would be for cash based on an enterprise value of approximately $500 million for Sahara. Pending regulatory approval, both airlines will continue to operate independently. Despite the deal, overcapacity continues to plague the industry and more deals are likely.

Eurex’s US woes are continuing. Last month the derivatives exchange’s chief executive, Rudolf Ferscha, stepped down. Ferscha had been behind the launch of Eurex US in Chicago in 2004 but sources say he was not given the support he needed to develop the US effort properly.

Iraq has completed a ground-breaking debt exchange that will involve Iraqi risk being actively traded for the first time in emerging market indices. It's a $2.7 billion Eurobond to join emerging market indices, boosting liquidity.

It might make sense for hedge funds to buy traditional asset managers. When Citigroup sold off its asset management arm to Legg Mason last year, leaving the focus on its separate alternatives business, it supported the belief of many in the market that traditional asset management was becoming something of a dinosaur.

As Latin American economies look forward to another year of robust growth, remittance flows continue to outpace expectations. With payments by expatriates worth a record $45 billion last year and increasing at more than 10% a year, it is little surprise that banks now want a piece of the action. Latin American and US banks are not only eyeing services to rival traditional wire services to bring in extra revenues, but also see money flows as a way to develop portfolios aimed at the small-scale Latin American customer, offering loans and mortgages.