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Tim Frost joined Cairn Capital in August 2004, just six months after the hedge fund was set up. Previously European head of credit sales, trading and research at JP Morgan, he is an example of the brain drain that has plagued large investment banks in recent years.

After five years in exile, Asian high yield is back. Deals from high growth, speculative grade companies, new to the capital markets, can now be brought to market fairly reliably. Some banks have got into the market more quickly than others, but as investment grade fees dwindle, their rivals are beginning to ask themselves if high yield is the future. Adam Harper reports.

When Citigroup consolidated its fixed income product origination for corporate and financial institutions in the US, it was only a matter of time before the strategy would be implemented internationally. In March, Citigroup aligned all investment grade fixed income product origination for corporates, financial institutions, sovereigns, agencies and supranationals under the combined leadership of Charlie Berman (qv) and Eirik Winter (qv) in Europe. As a result, a new position was created within the bank's fixed income capital market business for Valentin Ehmer as head of fixed income capital market products, Europe and Asia Pacific.

Barclays made Vijay Rajguru head of syndicate, sales and trading last June, giving him the title of managing director in January. Before his promotion, he was director and head of leveraged loans. Rajguru's new position marks the first time that Barclays has had a coordinated distribution team for all its loan products.

Vikram Malhotra is the head of Credit Suisse First Boston's global markets solutions group non-Japan Asia for Credit Suisse First Boston, based in Hong Kong. He was appointed to this entirely new role last December, when CSFB first created the new global markets solutions group (GMSG). Before that he had led the technology, telecommunications and media investment banking group for Asia, based in Singapore.

Morgan Stanley made Vinay Jayaram head of debt syndicate for Asia Pacific and Japan in January. He joins one of Asia's most lucrative debt franchises — Morgan Stanley established an enviable reputation during 2004 and the earlier part of 2005 for bringing little known high yield issuers into the market and picking up very healthy fees for doing so.

It may come as no surprise that it is three US commercial banks, JP Morgan, Bankers Trust and Citibank which were the starting point for the careers of nearly a quarter of all the bankers in this report. The 1980s and 1990s were a time of rapid change in the global capital markets. The erosion of the 1930s US Glass-Steagall Act, which separated investment banking from commercial banks, let retail banks return to the capital markets and overtake the established oligopoly of investment banks in securities underwriting.

BNP Paribas hired Youssef Khlat in September 2004 to run its European high yield capital markets business. It was an appointment that caused a stir in the European market — Khlat is one of the most experienced high yield and leveraged finance bankers, having cut his teeth in the business at Bankers Trust.

There is a lack of political and social consensus on the issue

The European high yield bond market has had its critics over the past five years, not least because of its lack of reliability. But the last 12 months has seen the high yield bond market develop a more solid and sustainable reputation.

Innovation in debt structuring in Europe has allowed sub-investment grade borrowers access to new capital bases and given private equity sponsors the ability to pitch for buy-outs well over Eu10bn. And despite conditions becoming considerably more challenging in leveraged finance in recent months, its future looks assured as one of Europe's most important, fastest growing financial products. Is the bottom falling out of Europe's leveraged finance market? In recent months, there have been a number of indicators that would suggest that it may be, with bridge loan facilities limping through syndication, leverage multiples stretched like elastic bands, spreads widening in the high yield sector and at least one private equity chief saying he would rather return cash to shareholders than pursue assets at inflated prices.