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DBS, already established as one of the region's more innovative issuers, went into overdrive last month as its acquisition of Dao Heng Bank in Hong Kong pushed it to the markets again. At the time of the acquisition DBS announced that it needed US$1.1 billion of tier two capital and US$550 million of tier one to replenish its capital adequacy ratios. Those were of course initial projections – and after due diligence, DBS cut its offer for Dao Heng. In the meantime however, DBS had set out to raise US$800 million in tier two capital through sole bookrunner Goldman Sachs. (DBS and Morgan Stanley were joint leads; Morgan has held joint status with Goldman on DBS's previous subordinated deals.)

For a brief moment, it looked like Thai prime minister Thaksin Shinawatra had hit upon the perfect solution to the country's US$79 billion external debt problem. Why not pay off the entire amount at once using gold bullion and pre-war US government bonds, left behind in Thailand by the retreating Japanese imperial army at the end of the Second World War? That fantastical possibility was first mooted on April 13 when Thaksin visited a jungle cave in Kanchanaburi Province, after hearing claims that it contained a veritable treasure trove buried deep in the ground. The truth of the matter, the prime minister said, would be revealed using sophisticated satellite-scanning techniques borrowed from the US.

A string of global custodians have formed alliances with mainland providers over the last year, and they were joined by another last month when Deutsche Bank announced an exclusive alliance with Bank of China (BOC). The announcement follows links between State Street and ICBC (June 2000), Bank of New York and Agricultural Bank of China (October 2000) and JPMorgan with Bank of Communications and China Construction Bank (February 2001). Alliances like this have become popular with the impending launch of China's first open-ended mutual fund and entry into the WTO.

Hongkong Land made an enviable debut in the international debt markets last month with a US$600 million bond, doubled in size from its original target and even then four times oversubscribed. And the 10-year bond – lead managed by Goldman Sachs, JPMorgan and HSBC – could hardly be criticized for being underpriced, as one would normally claim in the face of such demand. In fact, with a 7% coupon, it priced at 99.054 offering a spread of 195 basis points (bps) over treasuries – 5 bps tighter than price talk and tighter still than Hutchison Whampoa's recent US$1.5 billion five-year, despite the fact that Hongkong Land has a lower rating (A3/A-) than Hutch (A3/A).

Salomon Smith Barney (SSB) has taken a crucial step towards building a major Chinese investment banking business, by luring Francis Leung away from BNP Paribas Peregrine. Leung, who officially assumes his new post as SSB's chairman for Asia on July 1, will focus on developing Greater China investment banking business. He will report to Bill Mills, SSB's Asia-Pacific CEO, and also to Robert Morse, SSB's global investment banking co-head in New York. Why Leung would prefer SSB to BNP Paribas Peregrine can only speculated upon, as neither Leung nor BNP Paribas Peregrine nor SSB will comment. But presumably the backing of the huge Citigroup, with equity of some US$71 billion, will give Leung more scope to pursue the stream of major deals emerging from China. Leung clearly wishes to be at the centre of them.

"They go in and play havoc with people's lives. Every year! It's crazy." That was the response of a fund manager based in Malaysia when Asiamoney sought her view on Morgan Stanley Capital International (MSCI)'s latest changes to its stock indexes. "You can get quite resentful. And cynical," she adds in reference to the fact that the US has been the big winner here, with the weight of its index increasing to 55.3% from 49.1% in the ACWI Free Index. Meanwhile, many developing countries – a number from the Asian region – have seen a decrease. But that is not particularly surprising. It has been evident for some time that a number of developing countries would lose out from MSCI's adjustments. This is because the new methodology takes account of the number of shares that can be traded rather than the number of shares issued. Accordingly, factors such as government ownership, family ownership and ownership by other companies will now reduce a company's index weighting. Foreign ownership restrictions will also limit index weight. Jacques Roulet, MSCI committee member and head of new products in Japan admits: "It's true that in general foreign ownership limits tend to be lower in several Asian markets and also that the floats there are relatively low compared to the world average." When asked about any negative responses from countries, he fields the question noting: "I think our goal is to reflect the reality of the market."

Singapore's local bond market enjoyed a significant extension to its maturity curve in April when the Land Traffic Authority (LTA) issued the city state's first 15-year dollar bond. The S$500 million (US$277.3 million) deal, led by DBS, Citibank and Barclays Capital was upped from the original S$300 million in response to strong investor interest. S$20 million (including the greenshoe option) was placed with retail investors, being 4.3 times oversubscribed. Singapore's retail investors have largely remained an untapped source in the long-dated market, instead choosing to keep their savings tucked away in the bank. Says Stephen Finch, managing director of debt capital markets at DBS: "It shows the demand is there when you find the right product."

Is the GDR back? Compal Electronics' global depositary receipt issue in May was the second by a Taiwanese company this year after Sunplus Technology, and achieved the lowest discount on pricing from Taiwan since late 1999. The deal, led by Goldman Sachs, was 2.5 times oversubscribed. It priced at US$6.07 or NT$40 per common share equivalent, representing a 6.32% discount to the spot rate on closing day (May 16). Each GDR represents five common shares. "Normally the pricing discount depends on market conditions, but has ranged between 5% and 15% over the last 18 months," says Michael de Lathauwer, co-head of equity capital markets for Asia at Goldman Sachs. "The Compal deal is a very good story. Investor interest was a function of the perceived quality of the underlying equity story."

In April, Peter Costello, treasurer of Australia's Woodside Petroleum, handed down his decision to block energy group Royal Dutch/Shell's $10 million takeover bid of the company on the basis it was contrary to the national interest. It is a decision that few believe to be free from political influence. This is federal election year after all. And the ruling coalition has been struggling. Although Costello insists that his decision was based solely on the merits of the case – with absolutely no regard to anyone's (including the prime minister's) views – one may be forgiven for expressing a degree of cynicism. Shell's offer, brought in November last year, had sought to up its stake in Woodside from 34.3% to a controlling 56%, with a payment of $14.20 per share. However, a negative local media had pounced on the story, placing the potential foreign takeover squarely on the front pages. The public had consequently cried out long and loud.

Securitization has yet to take hold in Asia – except in Korea where the market is moving from strength to strength. But securitization experts remain optimistic that the rest of the region will catch up – despite competition from the high liquidity available in most of Asia's bank and bond markets. Mark B Johnson reports.

Reform seemed to slip down South Korea's list of priorities during recent years of stellar growth. Now that the country faces an unstable economic future is it more, or less, likely to tackle reform and restructuring? Jin Nyum, South Korea's deputy prime minister and minister of finance and economy, believes the former. He is keen to justify the government's recent actions, and shares his extensive plans for the country's restructuring with Asiamoney's Fiona Haddock.

Intel's first use of the capital markets since 1993 made for an eye-catching deal – an exchangeable into a privately placed convertible. By Chris Wright.