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.

The country’s president-elect knows little of economics, but is set to appoint a market-friendly finance minister.

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.

The second SVG Capital fund of funds securitization – SVG Diamond 2, again arranged by Nomura, has further developed the concept of private equity collateralized fund obligations. This is a managed deal where the assets are selected over time by SVG to deliver enhanced equity returns. Some €175 million of equity risk in the form of preference shares in the fund was sold to various external investors. This is drawable equity, meaning that this most expensive form of capital is not utilized until it is needed, thus enhancing the efficiency of the CFO. The rest of the financing comprises €328.5 million of rated paper (seven tranches ranging from triple A to triple B).

The name has changed but the business has not. Credit Suisse has demoted its First Boston heritage to a passing reference in its new logo, but it is far from jettisoning its US investment banking expertise. In January, it announced an expansion of its Asian leveraged finance team with three new hires in Australia, Hong Kong and Japan. Once this is complete, Credit Suisse will boast Asia’s largest leveraged finance team.

“Some of the other banks closed their internet offerings at 9pm. Just think about that for a minute. ‘The internet is closed.’”

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.

Funding from Abbott Laboratories for Boston Scientific’s bid for Guidant could set an important precedent.

UK

The US commercial real estate CDO market is the one to watch in 2006 for volumes and new opportunities.

In 2005, the Nikkei equity index shot ahead by 40% while 10-year Japanese government bond yields inched higher by just 15bp.

The UK’s Financial Services Authority is working on rules for UK covered bonds. Bankers hope that the regulator will announce at the February 7 Zurich meeting of the European Covered Bond Council plans for a framework for UK financial institutions. Abbey, HBOS, Northern Rock, Nationwide and Bradford & Bingley have all issued covered bonds using UK contract law. But because the UK has not introduced a special public supervision, UK covered bonds attract a 20% risk weighting for BIS restricted investors as opposed to the 10% enjoyed by investors for bonds issued where there is such supervision or specific covered bond law. This puts the UK issuers at a disadvantage as their bonds price wider. This development is a volte-face by the regulator. It initially had a conservative stance on the structure, placing an unofficial limit on the proportion of their overall balance sheets UK issuers could sell as covered bonds.

KfW inaugurated its 2006 euro benchmark programme with a blowout €5 billion 15-year deal, the first time the German agency has issued in this maturity. The deal is able to take full advantage of demand from pension funds and insurers for long-dated assets. Citigroup, Deutsche Bank and Merrill Lynch had a €10 billion order book after just one day. Pricing was 2 basis points through the 15-year swaps rate or 11bp over the April 2021 OAT.

Emerging market sovereigns that issue heavily in debt markets should prepare for higher borrowing costs.

Second-tier triple-A issuers have an opportunity to close the funding gap on KfW and EIB.

The borrower makes disappointing start to wave of telco financing.

Ask any of London’s famous black-cab drivers which investment bank they think is best and chances are they will vote for Deutsche Bank.

If anything symbolizes how far emerging markets have come over the past five years, it’s the growth of their domestic capital markets. Few would dispute that emerging markets local-currency debt is now an established asset class, despite its relative youth. Local-currency debt is the way of the future, but further reforms are necessary.

With hedge funds collapsing at record rates, funds of hedge funds will need to reassess their strategies. If you can’t beat them, join them.

Rumours of electronic broker EBS’s imminent takeover are rife, but a £1 billion price tag seems wide of the mark. Getting these to agree on whether tea or coffee is served at board meetings is probably difficult. Getting consensus on whether or not to sell EBS’s business, and then who to sell it to, must be a near impossibility.

High oil prices pushed Latin America’s equity markets to dangerous levels. In a new era where emotions about oil scarcity run high, Latin America is perceived as a big, endless supply of commodity wealth. But keep an eye on the volatility.

The corporate hybrid sector shifted to retail with Porsche's 7.2% $1 billion perpetual non-call five (no coupon step-up). The transaction has several unusual aspects linked to the rating and structure, marketing and pricing.

Residential mortgage-backed securities origination in Italy could be about to receive a boost with the entrance of international banks establishing prime residential platforms. SG and Macquarie are two names that are looking into the possibility. The attraction is the relatively attractive margin achievable on loans compared with France, Germany, the Netherlands and, of course, the UK. In the UK there are already several established players in both the prime and sub-prime space but there too Deutsche Bank is building a sub-prime platform.

The country’s stock indices are rising as the prospect of a coherent market looms into view.

Romania

Lebanon

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

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.

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.