It seemed like such a no-brainer. This time last year asset managers of every hue were falling over each other to establish debt opportunity funds – the obvious response to the looming liquidity crunch in the credit markets. Indeed, the number of firms setting up funds as early as 2005 showed how clearly they were seen as the next big money-spinner. Fast forward a year and, along with many other investment strategies across the capital markets, things have not quite panned out as planned. Credit opportunity funds that were poised to pile into the hung LBO pipeline last year were initially frustrated as many banks stubbornly refused to sell and secondary prices remained in the mid-90s. Several big sales in the second quarter of this year – such as Citi’s sale of $12 billion loans to Apollo Management, Blackstone Group and Texas Pacific Group and Deutsche Bank’s $5 billion deal with Apollo and Blackstone – were seen as a sign that the long-awaited deluge of distressed buying opportunities had arrived.

When it comes to mergers and acquisitions, Turkey’s banking sector remains a land of opportunity. UniCredit analyst Matteo Ferrazzi says: “In central and eastern Europe, opportunities for mergers and acquisitions are few and far between. Most banks are already in solid hands or owned by foreign players. But in Turkey, it is a different case and there are still banks to be privatized.”

The inclusion of the Pfandbrief in the German government’s banking guarantee marks a turning point – not just in the financial downturn but in the product’s entire history. Jethro Wookey reports.

Whisper it quietly, but Sarkozy’s bail-out plan looks the most market-savvy.

Unprecedented high spreads between European government bonds are prompting some radical – and frankly unworkable – new ideas.

Predicting corporate default rates on the basis of historical experience is a futile pastime.

Can Gulf financial centres’ high ambitions be fulfilled in a post-credit crunch world with falling oil prices?

With CDS prices at unprecedented levels, the crisis shows no sign of abating.

The witch-hunt of Dick Fuld is wrong. But that doesn’t mean it won’t continue.

The government bail out packages unveiled across developed countries last month may have prevented the collapse of a host of banks with more toxic assets than equity.

Corporate FX losses are already running into billions. The problem, as the dollar’s rally continues, could be endemic.

The central bank has begun to address the financial crisis but must take more action.

What was previously a winning model has become instantly bereft of merit in the eyes of investors.

The credit crisis is prompting corporate treasuries to make efficient use of their cash. But it has also thrown up doubts about how secure short-term investment vehicles such as money market funds are. Laurence Neville reports.

A three-way merger of Costa Rica’s largest state-owned banks to help deal with desperate funding shortages and reduce their operating expenses is not without its drawbacks. Chloe Hayward reports from San José.

For the hundreds of hedge funds caught up in the collapse of Lehman Brothers International’s prime brokerage, it might take years to claw back securities entrusted as collateral. Some face destruction through rehypothecation. It’s the first case of its type, and now the entire structure of prime brokerage is under scrutiny.

In October the credit crunch finally devastated global equity markets as investor panic threatened to bring down all but the very strongest banks. Alex Chambers was pounding the sidewalks of New York just as the crisis entered its most tumultuous period and perhaps its denouement.