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Since the passing of the UK’s Enterprise Act in April 2004, UK bankruptcies have doubled and individual voluntary arrangements (IVAs) – whereby borrowers can enter into a formal arrangement with their creditors – have risen fivefold. This is now becoming uncomfortably clear in the credit card ABS sector where charge-off levels were up from 4.72% in June 2005 to 7.04% in June 2006 according to S&Ps European Credit Card indices. Excess spread in these deals is trending commensurately downwards, from 7.13% to 6.31% over the same period.

By John Ferry

Depending on whom you believe, July was either a return to the black for hedge funds or a continuation in the red. In July, the Greenwich Van Global Hedge Fund Index lost 0.20%; the RBC Hedge 250 index returned –0.11%; and the HFRI Fund weighted composite index returned –0.24%. Credit Suisse/Tremont’s overall index returned 0.29%.

The governing council appears to be split between raising rates incrementally, at 25bp a time, and the short sharp shock of a 50bp hike.

Reports of the death of currencies as an asset class are surely exaggerated. Look for mean-reverting volatility to turn around the performance of currency funds.

Inflation is set to feed into the US economy, with destructive effects. But the beginning of the process won’t be the consumer slowdown that so many expect.

The second exchange of Soviet-era FTO (foreign trade organization) debt into Eurobonds is being formally launched this month, following a first debt swap in December 2002. The first exchange involved $184 million of 2010 paper and $1.2 billion of 2030 paper issued on London Club terms, with about 35% of debt written off. The new one will be carried out on the same terms, and the finance ministry estimates that up to $600 million of claims are eligible.

Brazilian mining group Companhia Vale do Rio Doce is poised to become the latest emerging market company to buy a rival in the developed world after becoming the favourite to acquire Canadian nickel producer Inco. The deal could make CVRD the world’s biggest nickel producer.

The small teams of professionals who work for the three clearing houses (foreign exchange, securities, derivatives) at Brazil’s Bolsa de Mercadorias & Futuros (BM&F) have a claustrophobia-inducing office, locked as they are inside a glass cube that sits in the centre of a larger room inside the exchange’s headquarters. Despite working in this intimidating setting, the clearing houses’ directors are welcoming and their efforts are for now focused on increasing foreigners’ access to and participation in Brazil’s growing derivatives market.

Venezuela’s president has threatened to nationalize telecom company CanTV in a row over workers’ pensions.

The European Bank for Reconstruction and Development has hired Manfred Schepers to be its new vice-president for finance. Schepers, who for the past two years has headed the European arm of the Bond Market Association, will take up the new role, which is similar to that held by a CFO in a commercial bank. He will look at the asset portfolio, treasury, strategy and budget at the supranational. “From my time at UBS, I’ve a lot of interest in development finance and emerging markets,” Schepers told Euromoney. Schepers worked at UBS for a little under 20 years and replaces Steven Kaempfer, who held the position for eight years before leaving the bank in June.

Azerbaijani company raises funds from outside the country by issuing bonds, a first from this country.