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In this period of shock ratings downgrades, weaker company balance sheets, increasing discrimination among credit investors and caution from lending banks, corporates are facing a liquidity crunch. One minute, banks are handing out revolving credit facilities without batting an eyelid and money-market investors are habitually turning over commercial paper, the next, relationship banks aren't quite so friendly any more. So what do corporates do when they are shoved out of selected CP markets and left scraping around to find short-term cash?

Speaking to Euromoney in April 1993, Lazard chairman Michel David-Weill expressed a fear of "mercenaries - the people who would come to the firm to make money". His appointment of Bruce Wasserstein as Lazard's chief executive suggests that he has either overcome his distaste for money-grubbers or that the firm is doing so badly that its very survival depends on having a few more of them on board.

Credit derivatives are the hottest area in the global fixed-income market. They promise to transform the entire credit world, by bringing greater liquidity and transparency. But the dramatic worsening in credit, exemplified by Enron's collapse, will severely test the market. Some fear the explosive growth has stored up unseen problems. Regulators fret that risks may have been transferred out of banking and into less sophisticated institutions.

Argentina's de facto default on $130 billion in face value of debt - investors who've seen the price of their bonds more than halve to 35 cents on the dollar in four months are in no doubt that this is a default-like loss, if not yet a legal default - and the tortuous progress of its supposedly voluntary and orderly debt restructuring, which shows no sign of being either, have drawn renewed and urgent calls for a better approach to sovereign debt work-outs.

The growing internationalization of investment and involvement of a wider range of investors has complicated the task of insolvency lawyers.

MULTILATERALS

RUSSIA

Sectors such as tourism have been mauled in the wake of September 11 events. Yet the broader regional economy is coming through that crisis and the global downturn in far better shape than during the Gulf War. Low oil prices are a concern. But, with confidence intact, capital is returning to local markets as a result of poor returns elsewhere and major project finance deals are under way.

In little more than a decade, Islamic banking has grown into a $200 billion a year industry. With top global banks entering the market, it is deepening its professionalism and broadening out with sophisticated and ingenious new products, including private equity, mortgages and even some securitization. Regulators are striving to impose stricter regimes. But individual Sharia courts can still be at odds over what is deemed compliant with Islamic law.

HONG KONG

After September 11, many market watchers reckoned that higher US public expenditure meant that reports of the demise of the 30-year treasury were exaggerated. Then, at the end of October, came the news of a suspension of long-bond issues. Opinions are divided on the wisdom and likely results of the surprise move and on when the 30-year bond will wake up from its big sleep.

In recent years many leading banks have appointed specialist portfolio managers to take responsibility for their whole loan books. If these have done a good job of reducing concentrations of exposure and hedging doubtful assets, banks won’t suffer too much in the credit downturn. The worry is that secondary credit markets have not developed enough for them to reshape their portfolios. And surprisingly it’s a new discipline. Many banks have still not embraced it and even those that have may not have given portfolio managers enough power to do the job properly.