Source: www.breakingviews.com is Europe's leading financial commentary service.

Who says economists are dull? Three of Wall Street's finest, and most bearish, took part in an early-morning debate about the impact of the Iraq war on the US economy at the Council for Foreign Relations in New York last month. At times it was like stand-up comedy, with Morgan Stanley chief economist Stephen Roach as the main act.

After years of trying to make its mark on Wall Street, Deutsche Bank is finally taking up residence there. There's only one problem - the staff don't want to go.

One key clause in Uruguay's proposed collective action clauses closes a loophole that Mexico left open in its own bonds: the question of whether the issuer could use exit consents on the payment terms of bonds with CACs. Exit consents, even on non-payment terms of bonds, are generally considered coercive and rather bad manners, even if a necessary evil for countries seeking to restructure their bonds.

The rise of UBS to the top of Euromoney's foreign exchange market share ranking this year proves how ill advised it is for any bank to declare itself the master of any financial market. Even in those sectors where a handful of banks appear to have achieved unassailable pre-eminence, newcomers can always break in. Seats at the top table are never reserved in perpetuity.

Uruguay is seeking to push out the maturities on its bonds to give it time to get its economy back in shape before having to repay its foreign debt. It's doing this by means of one huge exchange offer, with which it is trying to swap all of its outstanding bonds for similar bonds of longer maturity.

Retail investors dismayed by the dire performance of straight equity and bond funds look to be ideal customers for hedge fund products. Some national regulators have recognized this and liberalized marketing rules. But it’s not clear that the sector can sustain mass investment. • Julie Dalla-Costa reports

For two months Hong Kong's 6.8 million residents have been at the centre of the Sars (severe acute respiratory syndrome) outbreak, better known across the border in mainland China as "strictly avoiding realistic statistics". But the crisis now seems driven more by fear and hysteria than actual risk of infection.

Investor demand for US

The aftermath of war in Iraq may delay a few project finance deals in the Middle East but the market is in good health. Development diversification will spur large projects. Sponsors, however, may have to accept more costly financing.

Long Yongtu, China's former vice-minister at the finance and economy ministry and the country's chief negotiator for its entry into the WTO, might want to forget his performance at Credit Suisse First Boston's recent investment conference in Hong Kong. It could haunt him for a long time to come.

The German banks' latest ploy for repairing balance sheets bloated with non-performing loans is laughable. Siphoning off the good loans and leaving behind the non-performing ones - those that the banks really should be doing something about - can only result in balance sheets in worse shape than before.

Sovereign debt restructuring has been hotly debated for years. Paradoxically, though, two of the elements most fought over – collective action clauses and exit consents – seem now to have been accepted with equanimity. • Felix Salmon reports

Now that the military battle in Iraq is over, my sense is that equity markets want to go up. But I don't believe that this is the start of a new bull market. It is just the eye of the storm of the secular bear market. The bounce will eventually die down and the bear market will reassert itself. We have not seen the lows yet.

The term "black box" investing has often been applied to quantitative fund management, though it is seen by its practitioners as a somewhat pejorative description. Whatever black boxes they have at BGI, they certainly seem to work.

New technology is being developed to make hedge funds more transparent to investors. Risk management system provider Riskdata and Equalt, the alternative investment arm of Crédit Agricole Indosuez, are developing software to enable institutional clients to simulate the risk profile for different combinations of funds before they invest. They are working on an application for Riskdata's online risk management system. Initially it will enable investors to test how the Equalt fund would fit with their portfolios. "It's like opening a window on what we have on the book without disclosing actual positions," says Christophe Turpault, manager of Equalt's fixed-income arbitrage fund. This gives institutional investors more transparency about the risk of including funds in their portfolios. At the same time it allows the manager to protect the funds' positions.

Source: www.breakingviews.com is Europe's leading financial commentary service.

Issuer: France Telecom Size: e16 billion Bookrunners: ABN Amro Rothschild, Goldman Sachs, BNP Paribas

In the past year, fees on emerging-market bonds have plunged from 50 basis points or more to below 10bp. The fee war is taking its toll on emerging-market teams, but is it temporary or permanent? • Julian Evans reports

Investment banks are eager to do debt deals involving derivatives with Italian local authorities. Such a high level of competition is good news for the borrowers but they are also facing closer regulation of their use of innovative structures. • Jennifer Morris reports

Block trades help to make ECM bankers look busy in quiet times. But their success rests on a knife edge. • Peter Koh reports

In a period when panics have outweighed optimism among investors, the Sars epidemic is just the latest in a series of shocks that have cast doubt on Asian companies’ ADR prospects. • Chris Cockerill reports

A restructuring of Iraq's financial obligations is arguably the most important initiative that must be undertaken in that country next to providing humanitarian assistance.

Source: www.breakingviews.com is Europe's leading financial commentary service.

The Indian stock markets fundamentally reassessed Indian information technology stocks last month. Jolted by a sharp fall in profit margins and a profit warning for the next fiscal year from Infosys, the bellwether for Indian IT companies, the stock sank. The market capitalization of Indian IT stocks has shrunk by over a third this year to Rs662.8 billion ($14 billion) on April 24, tipping the 30-share Bombay Stock Exchange Sensex to a six-month low. That is likely to lead to the postponement of an initial public offering by Tata Consultancy Services, the biggest exporter of Indian software services, which has been trying to list for over a year now.

After Mexico came to market successfully with its collective action clauses (CACs), most observers reckoned that the IMF's plans for a sovereign debt restructuring mechanism (SDRM) would not be taken any further. The US Treasury in general, and undersecretary for international affairs John Taylor specifically, was known to be a zealous proponent of CACs, and now that the market had managed to adopt them there was no reason to threaten it with SDRM.

Source: www.breakingviews.com is Europe's leading financial commentary service.

Issuer: France Telecom Size: e16 billion Bookrunners: ABN Amro Rothschild, Goldman Sachs, BNP Paribas

Never let it be said that communists are out of touch with market reality - North Korea, sensing an opportunity to finance itself is to issue its first bond. Ruling party daily Rodong Sinmun says the bond issue "is an important measure to raise funds" to "crush US imperialists", a pitch that is sure to play well with investors.

Investors are still piling into US corporate bonds but there’s little sign of improved credit quality to justify this desperate enthusiasm. What’s more, interest rates must rise sooner or later. • Kathryn Tully reports