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Deals of the Year

Deals of the Year

International Equities: Issue now - before the next crisis

Deals of the Year

His punishing schedule was that of a corporate financier rather than a central banker. In five years as head of the Bundesbank's international relations, Helmut Schieber took an average 10 foreign trips a month to attend summits with bankers, finance ministers and regulators. "Yes, it was depressing," says Schieber of the ceaseless round of aircraft seats, chauffeured cars and windowless conference rooms.

Polish managers of a former state-owned company are receiving harsh lessons in capitalist reality. They are on the wrong end of the country's first hostile takeover bid, launched by a British firm with which they were in partnership talks less than a year ago. Worse, Poland's BIG Bank Gdanski, holder of 14% of the stock and a seat on the supervisory board, has not rallied to the target's defence and says it will sell at the best price.

It was a big-bang conversion with no modern precedent. Politicians had created monetary union; now it was up to banks to make it work. In Frankfurt, arguably the finance capital of euroland, the changeover was mostly a success. But there were some hairy moments and arguments over who caused a cross-border payments jam. Marcus Walker reports.

Europe's high-yield market was amongst the hardest hit by the Russian crisis. But as Rebecca Bream reports, the reasons for the market's bloom in early 1998 still hold good. Investors need greater yield and corporate restructuring is expanding the pool of potential issuers.

Among the candidates to blame for starting the emerging-markets crisis are leveraged hedge funds, foreign investorpanic, bad IMF advice, overvalued currencies and crony capitalism. A new scapegoat is the reckless Asian corporate, which overborrowed cheap dollars and expanded too fast: its bad risk management scuppered entire economies. Isn't this latest thinking just a plot by the World Bank to impose laisser-faire capitalism on the whole world? Brian Caplen reports.

The difficulties faced by one quality borrower in 1998 contain lessons for all. Toyota Motor Credit Corporation ­ the captive financing vehicle for Toyota's US sales subsidiary in the US ­ has traditionally been one of the most sought after names in the Eurobond market. The scarcity value of its name and the strength of Toyota meant that deals came to the market tightly priced and then tightened further on launch. The bonds then disappeared into the safe hands of Europe's buy-and-hold ­ largely retail ­ investor base.

Highly rated borrowers fared better during last year's crisis than lower-rated credits. But spreads on their bonds still widened sharply. The bonds that held their price best were not just those of issuers with little exposure to emerging markets but those that were most liquid. By Luciano Mondellini

Investors are shunning emerging markets and wary that the US market is a bubble about to burst. With interest rates low, that makes European equities so much more attractive. But issuers know it could all go horribly wrong. They are rushing to the market before investor sentiment turns sour. And increasingly, as Antony Currie reports, the deals they want executed are block trades, secondary offerings and equity-linked bond deals, not the blockbuster privatizations that were once the mainstay of the market.