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A project that spans 17,000 km and seven countries is bound to pose challenges. Add to this the task of convincing several banks to lend US$700 million to an undersea cable network company in an ailing telecoms sector, and you have a potential nightmare. Fiona Haddock reports on the recently completed C2C project finance deal.

The Indian government has set a target of raising US$2 billion during economic year 2001/2 through the sale of shares in a number of its companies. Prime minister Atal Behari Vajpayee has already set deadlines for disposing of shares in 13 state-run enterprises. All eyes will be on how the government handles the sale of its assets. Similar attempts in recent years have proved disastrous: in 2001, the government raised just US$88 million, and attempts to sell shares in Indian Airlines, Air India and Videsh Sanchar Nigam (VSNL) had to be withdrawn in the midst of procedural and valuation debates.

The Asian Development Bank (ADB) made a strong return to the global bond markets in January after a two-year absence. The US$2 billion five-year issue, led by HSBC, Morgan Stanley and Nomura, was completed on January 29. "When you hear the expression 'window of opportunity', I know it can sound corny," says John Keith, regional head of debt capital markets at Nomura. "But this really is what it proved to be." The ADB had been on a roadshow across the US, Asia and Japan in December to update investors on its funding plans and credit composition, and in January settled in to wait for the right moment to issue. It held off while other triple A-rated names Fannie Mae, Italy and L-Bank came to market, and in the light of confusing signals from Alan Greenspan and other members of the US Federal Reserve about future interest rate policy. Then, following more positive words from Greenspan in late January, the issuer and leads took a calculated gamble that interest rates would not be moved at the forthcoming FOMC meeting (they were proved right), and quickly launched the deal.

Purchasing Repsol YPF Indonesian oil fields was the best thing CNOOC could have done for its shareholders, says Mark Qiu, CFO and senior vice president of China's offshore oil and gas company, CNOOC. The US$585 million acquisition, which came into effect on New Year's Day, was paid for entirely in cash. Qiu explains that this was "an opportunity to rid the company of some spare change". Meanwhile the oil fields were already in production giving the company instant returns without significant investment. The largest acquisition by a listed Chinese company, and the first international acquisition by one of China's three public oil and gas companies, the deal has nevertheless been panned for not adding significant value to the company. Qiu waves this aside. He is confident the market agrees with management's assessment of the deal, and notes that CNOOC's share price went from US$7.50 the day before the announcement to US$8.15 the following week. "You pay for what you get," says Qiu. "I'm not paying for a billion dollar deal." He points out that the US$585 million base price provides the company with 6-7% earnings growth potential. Says Qiu: "Is 6% to 7% growth material? Of course it is!"

Japanese electronics company NEC sought ¥200 billion (around US$1.48 billion) in financing late last year in order to boost and restructure its debt laden balance sheet. To this end, it raised ¥100 billion by way of euro yen convertible bonds, achieving very attractive terms (see December/January Deal Mechanic). It also raised ¥100 billion at home in trust preferred securities, becoming the first non-financial issuer in Japan to launch a hybrid debt/equity deal in the market. Daiwa Securities SMBC and Merrill Lynch Japan were bookrunners and joint lead managers for the hybrid notes, with Shinko Securities included as an underwriter. The deal was placed through the NEC Business Trust, a wholly-owned subsidiary of the company established in the US.

PCCW's rehabilitation in the capital markets continues apace. Hot on the heels of a smartly placed yen private placement and a pricey but well-executed yankee late last year comes a strong convertible bond led by a bank that some assumed the issuer wasn't even talking to anymore. On January 24 Morgan Stanley completed the sale of a US$450 million convertible, upsized from its original target, for the Hong Kong-based telco. Bankers and investors had been speculating for weeks before Christmas that a euro or sterling bond was on the way, but very few people seemed to predict the deal that did appear. It is not exactly a landmark in the company's financial restructuring – that came with the deals late last year that pushed the company below a 3.5 times debt to EDITDA trigger, which as a covenant of an earlier loan, allows it to divided up to 75% of the profits from the HKTC subsidiary to the parent company at the March year-end. But it reduces interest payments considerably in refinancing part of the loan, as the bond has just a 1% coupon. The five-year tenor extends PCCW's debt maturity slightly.

A number of offerings from Taiwan, mostly convertible bond issues, flooded into the capital markets in the first month of 2002. Issuers in the electronics and technology sectors, eager for funds to meet their capital expenditure and technology upgrade needs, dominated the deals. "Last year, many Taiwan companies shelved their capital raising plans due to weak market conditions. But despite poor markets in other areas, the convertible bond markets remained open through 2001 for financing," explains Tse-Ern Chia, director of Asian convertible research at Merrill Lynch in Hong Kong. "What really caught the attention of Taiwan technology companies was the success of the UMC convertible bond deal completed in November 2001. That transaction highlighted the strength of the convertible primary market. Subsequently, we saw nine Taiwan technology companies file to issue Euroconvertible bonds in December 2001."

Despite the attention focused on China this year, another country dominated the region's primary debt markets for the first month of 2002: the Philippines. A successful US$750 million global bond from the sovereign was followed by a US$250 million issue from the central bank and a US$100 million eurobond from JG Summit. There was controversy, too: a deal of US$500 million for the National Power Corporation (Napocor), with the potential to undermine much of the newfound positive sentiment towards the country, was about to price as Asiamoney went to press. Why the rush? The first deal, for the Republic of the Philippines, was the key, with others able to mop up unsatisfied demand in its slipstream. But the Republic's deal was by no means a guaranteed success, given the sovereign's checkered history in the debt markets over the years. This time, however, the Morgan Stanley and Credit Suisse First Boston-led deal went well, establishing a useful benchmark and meeting much of the country's budget needs for the year.

When Indonesia announced plans to devolve power to its regions two years ago, the new province of Bangka-Belitung looked as though it would become rich. Not only was the small group of islands just off the coast of Sumatra one of the world's biggest pepper producers, it was also home to the world's largest tin mining company, PT Timah, one of Indonesia's privatization success stories of the 1990s. Profitable and well managed, Timah sailed through the Asian financial crisis in 1997. Then local leaders passed a regulation allowing the export of tin concentrate, previously banned. Almost overnight more than 6,000 illegal miners arrived at the minesite and started digging. Brokers carried off the ore, local security failed to act and soon the world tin market was reeling under excess supply as the miners extracted 18,000 tonnes in six months, almost half of Timah's annual production.

Most people were glad to see the back of 2001, but there were highlights amid the gloom. In issuance terms it was the reverse of 2000: plenty of impressive bond issuance but a dearth of new equity. Our deals of the year for 2001 were those that battled volatile market conditions and still produced successful, innovative transactions. By Chris Wright and Fiona Haddock.

The recent death of Harshad Mehta (aged 47), the key figure in the 1992 US$1.3 billion securities scam in India, has been described as the end of an era. But like all colourful characters he has left a colourful legacy: an unsolved mystery of 2.7 million missing shares in Indian companies and 72 cases of conspiracy, forgery, cheating and misappropriation of funds. Despite his passing away, the country's most flamboyant investor retains the dubious accolade of heading the list of the country's bank defaulters with a figure of Rs8.1 billion (around US$168 million) – a position he had occupied for almost a decade. Being hailed as a financial wizard and trusted by hundreds of players in financial markets was quite an achievement for a man who barely scraped through his Bachelor of Commerce with just 36%. Nonetheless, he became the country's investor guru (especially among the wealthy Gujarati community), flaunting a flashy lifestyle that included a penchant for expensive cars, the indiscriminate offering of investment advice, and hobnobbing with the rich and powerful.

Executive Access takes the number one spot once again in the Asiamoney headhunters poll, but in the individual stakes Eban's Stephen McAlinden steals this year's crown. Our respondents give their candid opinions on the best, and the worst, recruitment specialists in the business. By Matthew Montagu-Pollock.