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With the economy recovering from the recession incurred by the peso devaluation, Mexican companies are poised to sell between $1 billion and $3 billion in equity to overseas investors in the next 12 months. After two years of stagnation, observers expect renewed domestic consumption in 1997 to revive expansion projects placed on the backburner since the 1994 crisis. If the markets are adequately bullish, more companies will feel comfortable enough to issue equity as a cheap way to retire expensive debt.

In 1996, the convergence rally on high-yielding European government bonds was one big, premature Emu party, staged in the belief that all the governments that said they'd be ready for first-round entry to the eu's single-currency system would be. Market enthusiasm was based on taking note of contender countries' political commitment to European economic and monetary union rather than their economic fundamentals. This year bullishness will be replaced by a more cautious approach, as the markets become increasingly volatile.

Last year the international markets raised a record $113 billion in new equity and equity-linked instruments. Judging by rising secondary markets and heavy trading volumes in January, and an ambitious privatization calendar, investment bankers should be in for another busy year. But are hectic new issue schedules a recipe for mistakes? Peter Lee asks if the equity bonanza could end in disaster

This year, expect liquid loan markets, structured deals and credit derivatives, securitization, merger and acquisition fever, rapid privatization, and growing numbers of mtn programmes

Bond markets face one of the biggest changes yet as bankers prepare for the coming of the euro and with it the creation of a huge, pan-European capital market. It's going to change the way a lot of borrowers raise capital and broaden the outlook of European investors. In the meantime, borrowers, particularly corporates, have been taking advantage of liquid markets, low interest rates, and investors' increasing appetite for risk. By Peter Lee

The world's top 20 borrowers raised more than $250 billion in the international markets last year. Euromoney talks to the top borrowers to find out how they plan to meet their funding requirements for this year

Equity boom or bust?

As the fear of interest rate rises threatens virtually every market in the world from sovereign bonds to high-tech stocks to emerging market securities investors may no doubt be wondering where they can seek refuge.

It will be hard to beat last year's crop of deals. Here are some of the best.

The Bank of England's discussion paper released in November on the supervision of credit derivatives rather dampened market enthusiasm reflected in a report by the British Bankers' Association (BBA). But the effect should be only temporary.

Investment banks see Asia as the next big market, so the largest ones have all established derivatives operations in the main centres. That means fierce competition ­ but it's a fight for relatively thin demand. Regulators in some countries restrict use and local exchanges are undeveloped. But growth has come in surrogate markets and such instruments as covered warrants in Hong Kong. Antony Currie reports.

The governments of Asia have never trusted financial markets. They view stock exchanges as little better than Chinese gambling dens, and find it hard to comprehend that bond, foreign exchange and money markets are any less dominated by wild speculation. As a result, the regulatory and tax environment for financial markets in Asia is still rooted in the 1960s. Banking systems are rigged in a such a way that banks are forced to provide cheap finance for industry, and allowed little room to develop. The biggest Asian economies have progressed remarkably in technical and managerial competence in the past 20 years, but their financial industries remain appallingly backward.