best of 1998, The

Global Finance, Feb 1999

Imagine what 1998 would have looked like if it had not been for that terrifying skid the capital markets took in late August. The approach of the European Economic and Monetary Union was generating unruly capitalistic optimism-never mind the high unemployment and return of left-leaning governments. The United States had again become the leader of the free (market) world with its soaring stock market and support of the International Monetary Fund-never mind the Monica scandal.

True, the emerging markets, particularly companies and individuals in Russia or Indonesia, were hardly breaking into choruses of "Happy Days Are Here Again." Commodities companies couldn't fake any bright news, unless they wanted to buy competitors dirt-cheap or were hedged up to their eyeballs. And Japan, after embarking on its umpteenth economic recovery package, still seems far from recovery.

Many of the best deals of 1998 were solutions to problems or occurred in spite of uncertainty. In equity markets Japanese issuers floated two megaofferings despite Tokyo's dismal stock market. By the end of the year new US flotations were exhibiting bipolar tendencies: Gigantic public spin-offs of blue chips on the one hand and diminutive Internet IPOs on the other.

The best debt deals of 1998 broke new ground in both size and inventiveness. While WorldCom sold a record $6.1 billion in bonds to buy out British Telecom's MCI stake, new forms of exchangeable and convertible issues continue to obscure the line between corporate debt and equity-and structured finance operators find new assets to securitize.

Project finance made the best of a tough year, finding ways to fund unglamorous Latin American fertilizer and oil projects despite the plunging price of crude and sovereign downgrades. A telecom project in India was financed before the dust from that country's nuclear explosion had settled.

In soaring and plunging stock markets alike, a number of companies stood out as new shareholder darlings. Common themes of the best stock boosters of 1998 included bold restructurings and CEOs not timid about pushing their companies.

Shareholders particularly responded to consolidations, helping to make M&A perhaps the most amazing category of all in 1998-nine of the 10 largest mergers in all history occurred last year. Almost all the biggies involved stock swaps, and an increasing number crossed borders.

Governments served as a backdrop for all this activity, creating the kind of world in which corporations operate. We single out some laudable moves by governments, from impressive privatizations to attempts to make the world safer for capitalism.

Unfortunately, although we also picked on some private sector bloopers, governments dominated the worst blunders of 1998, too. Check out the winners and losers in the following pages.

THE BEST EQUITY DEALS

1 NTT DoCoMo's global IPO

2 DuPont's flotation of Conoco

3 AMP's demutualization

4 The global flotation of AIstom

5 The blazing,IPO for eBay

THE BEST DEBT DEALS

1 WorldCom's megabond issue

2 Fannie Mae's Benchmark program

3 Swisslife's exchangeable bonds "

4 Parmalat's perpetual preference ssr

5 National Provident's securitization

THE BEST IN PROJECT FINANCE

1 FertiNitro

2 Project Funding Corporation

3 Sincor

4 Southern Cross

5 Tata Communications

THE BEST STOCK BOOSTERS

1 Aegon

2 Grupo Modelo

3 Fomento de Construcciones y Contratas

4 Apple Computer

5 Pearson

THE BEST MERGERS

1 British Petroleum-Amoco

2 Deutsche Bank-Bankers Trust

3 America Online-Netscape

4 AT&T-Tele-Communications

5 Fortis-Generale de Banque

THE BEST GOVERNMENT PLOYS

1 Alan Greenspan's interest rate cuts

2 South Korea's debt restructuring and bond issue

3 Brazil's Telebras privatization

4 Karel van Miert's brinkmanship with Credit Lyonnais

5 Poland's Grupa Pekao privatization

THE WORST BLUNDERS

1 The IMF's policy in Indonesia

2 Russia's debt default

3 Long-Term Capital Management's implosion

4 Hongkong's stock market intervention

5 Chainsaw Al's ignominious fall