KAZAKHSTAN LOOKS COSTLY COMPLIANCE: RISK MANAGEMENT: FOR OPPORTUNITIES COMPANIES APPEAL INSURERS ADAPT TO A BEYOND OIL & GAS PAGE 39 FOR HELP PAGE 41 CHANGING WORLD PAGE 43 SURVEY WORLD’S BEST DEVELOPED MARKET BANKS APRIL 2005 A revitalized industry prepares for a bumper year PROJECTPROJECT FINANCEFINANCE REACHESREACHES FEVERFEVER PITCHPITCH PAGE 12 TLFeBOOK TLFeBOOK CONTENTS APRIL 2005 | VOL.19 NO.4 COVER STORY PROJECT FINANCE BY GORDON PLATT REGULARS 12 Project Finance Activity Reaches Fever Pitch 2 Dear Reader The project finance industry had a A letter from the editor. banner year in 2004.This year looks set to be even better. 4 Newsmakers Colombia’s finance minister, Alberto Carrasquilla, battles in vain to keep his FEATURES BEST DEVELOPED country’s currency from rising against the 16 Best Developed Market MARKET BANKS slumping dollar; and Sir Howard Stringer, BY PAULA L. GREEN & the Welsh-born head of Sony America, Banks ANITA HAWSER becomes chairman and CEO of the Global Finance unveils its annual list Japanese parent company. of the best banks in developed markets around the world. 6 Milestones Mystery money from the Caribbean and 24 Roundtable: Turkey Bermuda sends the dollar on a wild ride; At a recent meeting in Istanbul, ROUNDTABLE: and the People’s Bank of China pulls out TURKEY Global Finance brought together all the stops in its attempt to cool the some of the key figures in Turkey’s country’s property market. banking and finance industry to discuss the country’s prospects. 8 Emerging Markets Roundup The latest news from China, India, 30 Global Custody Buyer’s Russia and Brazil. Guide th In our 15 annual listing, we GLOBAL CUSTODY 10 EM Investor provide a comprehensive guide to GUIDE Key information for investors in emerging the services of the world’s top markets. custodians. 45 Focus: Mergers & Acquisitions 39 Country Report: Kazakhstan The European private equity market is Kazakhstan has immense energy growing rapidly, as US buyout firms seize reserves, but its government is opportunities to help restructure determined to diversify the corporate Europe. country’s economy. Its efforts are COUNTRY REPORT: KAZAKHSTAN bearing fruit—slowly. BY PAULA L. GREEN 49 Foreign Exchange Asian central banks may tilt the US yield 41 Costly Compliance curve upward by cutting back on their As the full demands of complying buying of US treasury bonds. with Sarbanes-Oxley become clear, companies are increasingly calling 51 Corporate Debt for help in reining in the costs. Samurai and kangaroo bonds are hopping COSTLY COMPLIANCE as US companies seek to diversify their 43 Insurers Seek New Role BY PAULA L. GREEN sources of funds. In A Changing World Insurers are getting more involved 52 Global Equity/DR in helping their corporate clients A growing number of Israeli companies understand the risks they face. are listing their depositary receipts on the London Stock Exchange instead of on Nasdaq. 2005 APRIL 1 TLFeBOOK DEAR READER APRIL 2005 | VOL.19 NO.4 Place Your Bets KAZAKHSTAN LOOKS COSTLY COMPLIANCE: RISK MANAGEMENT: FOR OPPORTUNITIES COMPANIES APPEAL INSURERS ADAPT TO A ith corporate misbehavior and accounting shenanigans BEYOND OIL & GAS PAGE 39 FOR HELP PAGE 41 CHANGING WORLD PAGE 43 SURVEY WORLD’S BEST DEVELOPED MARKET BANKS apparently under control, the focus of the conversations EDITOR IN CHIEF AND CHAIRMAN: PAOLO PANERAI APRIL 2005 among the financial chattering classes has moved on. In W PUBLISHER AND PRESIDENT: JOSEPH D. GIARRAPUTO fact, it has become a dual focus—on the fall of the US dollar and A revitalized industry prepares for a bumper year on the rise of the hedge fund industry. EDITOR: DAN KEELER The two came together last month with speculation that hedge EUROPE EDITOR/LONDON: ANITA HAWSER funds had been buying up US securities in such quantities that CONTRIBUTING WRITERS: PROJECT their purchases were reversing the downward trend of the dollar. GORDON W. PLATT, JR., SANTIAGO FITTIPALDI, PAULA L. GREEN, AARON CHAZE, FRASER RICHARDSON, FINANCE (See Milestones, page 6.) At first glance, that seems a pretty strange KIM ISKYAN, LAURENCE NEVILLE REACHES FEVER PITCH PAGE 12 thing to do, given that hedge funds are more likely to want the dollar to fall further so they can ride it down. Currency markets PRODUCTION MANAGEMENT (MILAN): GIULIANO CASTAGNETO had already been seriously rattled by reports that Asia’s central ART DIRECTION: ER CREATIVITY/ENRICO REDAELLI, bankers were starting to diversify their banks’ holdings away from CLARA CIOCCHINI dollars, but the revelation of the near-$40 billion purchases helped COPY EDITOR: TINA ARIDAS reassure the markets that the dollar wasn’t about to fall off a cliff— and marked the start of a 10-day dollar rally. VICE PRESIDENTS, SALES: SEBASTIAN CAZEIRO, LEWIS GALATI, PETER RIORDAN, THOMAS GEORGIADES, It is not easy to see how hedge funds could benefit from propping GRAEME McQUEEN, SALES DIRECTOR, EUROPE AND ASIA, up the value of the dollar, but there are some intriguing echoes of RICHARD SCHOLTZ, SALES MANAGER, EUROPE 1992.That was the year that George Soros catapulted hedge funds MKT’G COORD, SPECIAL PROJECTS/EVENTS: into the limelight with his raid on Sterling that forced Britain’s NATASHA TRAJKOVA PUBLISHING ASSOCIATE: currency out of the European Exchange Rate Mechanism—and left LAURA GALLETTI the Bank of England out of pocket by about a billion pounds. Soros, MANAGING DIRECTOR, OPERATIONS: who believed Britain’s currency was significantly overvalued, had a CHRISTOPHER GIARRAPUTO simple strategy: borrow billions in Sterling and then use it to buy ACCOUNTING MANAGER: YAWO GBEGNEDJI Deutschmarks and French francs.The selling pressure forced the ADVERTISING OFFICES British to give up defending the pound, which then plummeted, LONDON 44-207-583-7588 NEW YORK 1-212-447-7900 leaving Soros with his gargantuan profit. RIO DE JANEIRO 55-21-2274-3099 By temporarily pumping up the value of the dollar, hedge funds ADVERTISING REPRESENTATIVES: Bulgaria: Elka Koleva, Adia Advertising and currency speculators could be setting the stage for the mother Agency. China: Mary Yao, Media Gateway International Ltd. Germany: Erhardt Eisenacher, Eisenacher Media. Hong Kong, Malaysia, Singapore: Godfrey Wu, of all currency raids. If they are, and they pull the plug any time MHI Limited. India: Faredoon Kuka, Ronny Mistry Assoc. Pvt Ltd. Indonesia: Rita Jayadi, PT Mediarep. Israel: Asa Talbar, Talbar Media. Japan: Shigeru soon, the effects will be dramatic and painful.Any organizations Kobayashi, JAC Media. Mexico & Costa Rica: Xavier Romero Goytortua. that have not yet hedged their exposure to the dollar would be Pakistan: Imran Ahmad, Pace. Philippines: Abdel Teodoro. Russia/CIS Baltic States: Arkady Komarov. South Korea: Heinz Kim, Heinz Communications Inc. wise to remember that it is not only the Alan Greenspans of this Taiwan: Keith Lee, Advance Media Services Ltd. Thailand: Nartnittha world who can move the markets. Jirarayapong, N.J. International Media Company, Ltd. Turkey: Lemi Tanca GLOBAL FINANCE MEDIA INC CHAIRMAN: P. PANERAI Expanded Emerging Markets Coverage VICE CHAIRMAN: A. BASODAN DIRECTORS: G. CAPOLINO, J. GIARRAPUTO, On page 10 of this issue you’ll find a new section: EM Investor. A. MATTEI, I. MAJEED, V. TERRENGHI covering subjects of interest to investors looking to put their SECRETARY: L. PANERAI FOUNDING EDITOR: CARL G. BURGEN money into emerging markets.We’re excited about our expanded April 2005, Volume 19, Number 4. Global Finance (ISSN 0896-4181/USPS 006-578) is emerging markets coverage and we hope you find it interesting published monthly except a combined July/August issue in July by Global Finance and, most of all, useful. Media Inc, 411 Fifth Avenue, New York, NY 10016. Telephone: 1-212-447-7900. Fax: 1-212- 447-7750. E-mail: [email protected]. London editorial office: The Associated Press Building, 12 Norwich Street, London EC4A 1QU, UK. Telephone: (44-207) 436-1356; Fax: (44-207) 436-1568. Periodicals postage paid at New York, NY, and additional mailing Until next month, offices. Postmaster: Please send address changes to Global Finance, PO Box 2028, Langhorne, PA 19047, USA. Copyright © 2005 by Global Finance Media Inc. All rights reserved. Reproduction in whole or part without permission is prohibited. Microfilm and article copies are available from UMI. Telephone (313) 761-4700. Subscription: one year, US $350. Single copies: US and Canada $30.00 each prepaid; $33.00 outside US prepaid. Customer Service: (212)447-7900 ext. 227. Reprints available. Dan Keeler Contact: PARS International Corp. Telephone: (212) 221-9595. Fax: (212) 221-9195. [email protected] Printed in the United States. Web Site: www.gfmag.com INTERNATIONAL R 2 APRIL 2005 TLFeBOOK TLFeBOOK G LOBAL G F INANCE NEWSMAKERS F AROUND THE WORLD COLOMBIA JAPAN FINANCE MINISTER CAN SIR HOWARD STRINGER WRESTLES WITH AN GET SONY BACK ON COURSE? IRREPRESSIBLE PESO Sir Howard Stringer, inance minister Alberto benchmark rate down to the Welsh-born head Carrasquilla of Colombia 6.5%, but still the peso rose. of Sony America, has Fhas pulled out all the Last December, President been named chair- man and CEO of the stops to keep the country’s Alberto Uribe signed an Japanese parent currency from rising against executive order restricting the company. The gaijin the slumping dollar. Sadly, inflow of short-term CEO, rare in Japan nothing seems to work. investments by requiring and a first for Sony, The peso rose 16% last international investors to keep may implement year, making it one of the their money in the country some drastic turn- strongest currencies in the for at least a year.The capital around measures world, to the chagrin of the controls proved virtually that would have country’s exporters, who useless in stemming the peso’s been difficult for a complain they are losing their appreciation and will be Japanese manager competitiveness despite a abandoned within the next to implement.