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Spain's banks can be split into those with Latin American exposure and those without. While domestic savings banks such as Caja Madrid prosper as safe havens for bondholders, SCH and BBVA are seeing their credit spreads widen due to Latin American uncertainty. As Neil Day reports, this month's presidential elections in Brazil will be of enormous importance to investors in Spanish banking debt.

The Russian rouble fixed income market is in rude health, with a growing number of issuers set to tap the markets and an increasing number of investors looking to snap up the resulting issuance. Guy Norton reports.

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Many of the building blocks are in place for the expansion of the private equity market in Japan: low asset prices, a real need among corporates to restructure; workable bankruptcy laws and an established and liquid local banking industry. Critically, though, appetite among the big Japanese banks for the provision of leveraged debt remains low. Think about the perfect environment, theoretically, in which private equity should thrive.

JPMorgan, Goldman Sachs and UBS Warburg have started aggressively marketing equity variance swaps--instruments that allow investors to gain exposure to changes in volatility--and some are pushing new versions as demand rockets on the back of high volatility. European equity volatility has spiked as high as 50% in recent weeks, which is higher than levels seen after Sept. 11, traders said. JPMorgan has seen a six-fold increase in demand for variance swaps in recent months and is now selling about 30 transactions a month, according to a firm official.

Traders are examining their counterparty risk to JPMorgan in light of a recent downgrade and a statement that the bulge bracket will post weaker than expected earnings. Although the firm is still rated AA minus traders said they are reviewing their collateral agreements with an eye to reducing risk, either by shrinking credit lines or buying credit protection. Eileen Darko, spokeswoman in London, declined comment.

KEB Commerz Investment Trust Management, a Seoul-based asset manager with USD2.1 billion under management, is examining using over-the-counter equity options for an upcoming fund. Jae Hyun Lee, head of equities in Seoul, said that once the fund is up-and-running it will look at the possibility of using OTC puts and calls in addition to exchange-traded options and futures. He expects the fund to launch in the coming weeks, but declined further comment.

Nomura International and Credit Suisse First Boston have agreed to a provisional court date early next year for their dispute over whether exchangeable bonds are deliverable in a USD10 million Railtrack credit-default swap. For the complete claim form in PDF format, click here.

Merrill Lynch has hired Helen Oldfield, v.p. in the legal department at Credit Suisse First Boston in London, in a similar role. Sid Kurth, head of European debt markets council for Merrill in London, said Oldfield will be a replacement for Robert Webster, director, who recently joined Bank of America (DW, 7/7).