Global Finance

Offshoring information technology services is an emotive subject that incites mixed responses from most companies. Yet, while offshoring of IT may be here to stay, recent research commissioned by IT services company FDM and conducted by technology marketing agency Vanson Bourne indicates that companies are less than happy with the results. Julian Divett, COO of FDM, says the perceived cost benefits of outsourcing IT jobs offshore are beginning to be outweighed by other considerations such as ...

Us Shouldn't Take Its Aaa Rating for Granted

Standard & Poor's credit analyst Nikola Swann says the dollar's preeminent role in the world cannot be taken for granted. However, the external position of the US is weak and that its net external debt relative to current-account receipts is among the highest of the countries that S&P rates. In a worst-case scenario, if the dollar's preeminent role as an international currency should begin to diminish as a result of the budget deficit, worsening inflation or protectionist trade polici...

Milestones: Taking Note

Venezuela's Monetary Experiment

Venezuela is gearing up for the introduction of a new currency to replace the bolivar, in circulation since 1879, in a move the Hugo Chavez administration hopes will help curb inflation. While the bolivar fuerte will begin circulating on Jan 1, 2008, local businesses began setting prices in both old and new currencies on October 1 in a move the central bank contends is part of a process to educate consumers. Local economists are not convinced and argue that the move should have been accompani...

Challenges Grow in Run-Up to New Payment Rules

Banks and companies in other parts of the world are watching with interest as the deadline for radical transformation of the UK and Europe's cross-border payments landscape draws closer. In 2008 the UK Faster Payments and the single euro payments area (SEPA) will transform UK and European payments systems. SEPA is also forcing European banks to reassess their payments strategies, with more than 61% of banks indicating that they are developing new sourcing strategies in order to remain competi...

Loonie Bests the Greenback for the First Time in More Than 30 Years

Record prices for Canadian commodities have combined with a surge in foreign investment, robust job growth and the US Federal Reserve's recent interest rate cut to send the Canadian dollar on a growth spurt. Also known as the loonie for the swimming bird pictured on its one-dollar coin, Canada's currency edged above the greenback for the first time in almost 31 years. Not all Canadians are pleased about their currency's newfound status. And some contrarians predict parity with the US dollar w...

$100 Billion Bank Fund Buys Time for Treasury

The US Treasury in effect told the big American banks last month to clean up their own mess and not to look to the federal government for a bailout to help them recover from the asset-backed lending crisis. It got a half dozen or more of the biggest banks together in a room and facilitated the creation of a private sector debt rescue fund that ultimately could reach $100 billion. The bailout fund will only buy highly rated assets and, therefore, won't have a direct effect on the subprime mark...

Emerging Markets

Bankers Still Bullish On Brazil

Investment banks say the recent US Fed rate cut, coupled with strong domestic fundamentals, bodes well for Brazilian capital market investors. Fed easing since mid-August has opened up a new leg of the bull market in Latin American equities, especially in Brazil, says a Citi report. Other investment banks agree with Citi's bullish outlook. Credit Suisse predicts investments in Brazilian securities will hit record highs this year, with equity investments rising to $17.8 billion from last year'...

Putin Unveils His Power Play

In the second political bombshell in three weeks, Russian president Vladimir Putin in early October announced that he would lead the ticket for party of power United Russia and that he might become prime minister next year when he steps aside from the presidency. Putin's 70%-plus popularity ratings virtually guarantee him support for whatever tactic he takes, ignoring the continued international din over the slow but steady erosion of democracy in Russia. Mid-October saw the re-opening of the...

Pension Funds Like Local-Currency Debt

Study Says Dr Programs Boost Share Prices of Em Companies

Warren Buffett Bangs the Gong

Cover Story

Party On!

Private equity has become a significant and vital component of the global economy in the past decade. Its effect is felt at every level of the company hierarchy. According to the European Private Equity and Venture Capital Association (EVCA), a record $450 billion was invested in European and North American companies by private equity in 2006 -- an increase of 60% on 2005. Meanwhile, private-equity-sponsored companies were responsible for 40% of all US IPOs in 2006, and buyout funding represe...

Corporate Financing News: Mergers & Acquisitions

European Energy Deals Keeping Investment Bankers Busy Despite Slump in Leveraged Buyouts

Energy companies are fueling a merger boom in Europe, as the industry continues to restructure in response to liberalized markets and foreign competition. Investment bankers are welcoming the advisory fees from these huge deals at a time when leveraged buyouts have been largely put on hold amid the fallout from the subprime mortgage crisis. Vienna-based OMV, Austria's leading oil and gas company, launched a hostile bid for Hungarian rival MOL in September that values the Budapest-based firm a...

Annual Survey

World's Best Derivatives Providers 2007

The fourth annual Global Finance awards for the World's Best Derivatives Providers comes at a time when derivatives are in the mainstream news as never before. The US subprime mortgage crisis has spawned a credit crunch of unprecedented proportions. Crucially, the contagion from the subprime market to the broader financial markets has occurred largely through the use of credit derivatives and structured products such as collateralized debt obligations. The awardees include: 1. Morgan Stanley ...

Corporate Financing News: Foreign Exchange

Weak Dollar Unlikely to Reach Crisis Stage

The dollar tumbled to a record low against a basket of leading currencies known as the dollar index at the end of September and likely will fall further, but no dollar crisis or rescue package is likely, analysts say. In a report released on September 27, JPMorgan Securities revised its forecast peak in the euro from $1.42 to $1.48 in the first quarter of 2008, with the dollar then expected to turn upward in anticipation of higher US rates later next year. Although a dollar rescue, unilateral...

Corporate Financing News: Global Equity/Drs

China Unleashes Ipos to Soak Up Liquidity

China has approved a series of major IPOs in recent weeks in an attempt to cool its soaring stock markets by flooding them with a growing supply of new issues. The country's main Shanghai index has more than doubled so far this year, following a similarly strong performance in 2006. Meanwhile, the IPOs keep coming and are being met by strong demand from investors. The A-shares are not available to foreign buyers. China Coal Energy, the country's second-largest coal producer, is awaiting regul...

Corporate Financing News: Corporate Debt

Us High-Yield Market Coming Back to Life

The high-yield bond market in the US has revived, thanks in part to the Federal Reserve's half-point interest rate cut on September 18, with some companies able to double the size of planned note issues due to strong demand and with fewer borrowers being forced to offer concessions to get deals done. US high-yield new-issuance volume totaled $6.55 billion in September, up from $565 million in August, according to Montpelier, VT-based KDP Investment Advisors. The biggest high-yield note offeri...

Country Report

Growth Pains

Just as Chinese authorities began spending millions of dollars this summer to prepare the country for the 2008 Olympic Games, which Beijing hopes will improve its international image, several US companies issued recalls for a variety of Chinese products ranging from tainted foods to toys covered in lead-based paint. Beijing established a top-level panel to oversee food and product safety issues and, in an unprecedented move for a country known for keeping tight reins on the media, invited jou...

Sector Report

Clear

SWIFT (Society for Worldwide Interbank Financial Telecommunication), based in La Hulpe, Belgium, is the back-office "plumbing" that carries millions of financial messages pertaining to payments and securities transactions between global clearing banks. While banks are still the main users of SWIFT and its related services, there are now 250 non-banks that are directly or indirectly connected to SWIFTNet, and 33% of SWIFT's bulk payment file traffic comes from these very same companies. In an ...

Focus

Building a Stronger Supply Chain

Understanding what is happening across the financial and physical supply chain is critical in order to remain competitive. Many companies are now looking at financial and physical supply chain in a holistic way, bringing together the whole picture to create the most value for clients and for themselves. Companies often use various supply chain software solutions and inventory management suites, which can have incompatible data formats and dissimilar data fields for the same information. When ...

Buyout or Sellout?

As the selloff of Canada's biggest and best-known companies reaches record levels, politicians, labor leaders and even some business executives are accusing the country's corporate elite of sacrificing Canada's future for the sake of short-term gains. The high-water mark in Canada's M&A frenzy came this summer when British mining conglomerate Rio Tinto acquired aluminum giant Alcan of Montreal for $38.1 billion. Vancouver's Intrawest Corp, a real estate and leisure company whose interests...

Emerging Markets: Around The World

Foreign Telecommunications Companies Embark On a Spending and Growth Spree

Following the recent acquisition of Indian telecom company Hutchinson Essar by Vodafone Group in May 2007 for $11 billion, Russian telecom company Sistema's acquisition of a 10% stake in fixed-line operator Shyam Teleink in September and Verizon's Indian partner's recent bid for 22 telecom licenses, speculation has grown about AT&T'S potential growth in India through acquisitions. AT&T exited its Indian telecom joint venture in Idea Cellular in 2005, where it held a minority stake. Bu...

Business As Usual As China's Wealthy Rack Up Huge Gains

At China's mid-October National People's Congress, Hu Jintao kept his position as president and made a clear attempt to further consolidate his power. Premier Wen Jiaobao clung onto his position as well. While the party was playing politics, it was business as usual in the rest of China. Shenhua Energy raised 66.6 billion yuan ($8.9 billion) in its recent Shanghai IPO. China's wealthiest citizens doubled their fortunes in the past year, according to Shanghai-based group Hurun Report. The grou...

Contributed Article: The Bank Of New York Mellon

Global Capital Flows

Analysis

Shariah-Compliant Corporate Finance Forges Ahead

While the initial wave of modern Islamic banking focused on the retail side of the business, investment banks are the new trailblazers. US and European banks are bidding for Shariah-compliant tranches of major financings to repackage as investment funds. Meanwhile, the oil-rich countries of the Middle East offer a pool of liquidity that is a big draw for financiers and companies seeking to raise capital. Dubai Ports World's takeover of UK-based port operator P&O last year was financed in ...

The Bank Of New York Mellon

Fx Update

In lowering interest rates by 50bp on September 18, the FOMC finally gave life to the market's expectations of divergent monetary policies astride the Atlantic and EUR/USD rallied accordingly. One possible barrier to the pair's progress is the ire of European politicians charged with protecting the interests of European exporters. But then, recent history suggests that this barrier is hardly insurmountable. In citing the CNY's enhanced flexibility as the sine qua non of stabilization in world...

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