Lehman joint venture to offer emerging market risk measurement

Wall Street investment bank Lehman Brothers and New York-based political risk research firm Eurasia Group have formed a joint venture to combine Lehman's fixed-income research with Eurasia's political science expertise.

The new venture represents the first comparative risk assessment tool that incorporates political, economic, social and security developments geared towards emerging market investors, the firms claimed.

The joint research team has also created the Lehman Eurasia Group Stability Index (LEGSI), which rates each country on four different categories of risk. The methodology used to create this index incorporates 20 different variables, both quantitative and qualitative, that evaluate the political, economic and social structures within each country.

"Before making significant fixed-income decisions, our global institutional clients need a form of risk measurement that goes beyond economic factors," said John Llewellyn, chief global economist at Lehman Brothers. "Our leadership in developing indexes that denote significant trends in fixed income takes a whole new direction with this program."

Chaired by Lehman Brothers' managing director, Tom Bernard, the new venture produces reports on 10 countries and will double its coverage to take in markets in Latin America, Africa and other Asian countries by the fourth quarter. Current research encompasses Azerbaijan, Bulgaria, Croatia, Hungary, Indonesia, Poland, Russia, Thailand, Turkey and Ukraine.

"By combining our political analysis with Lehman's financial capabilities, we are bringing politics and business together where they critically affect each other," said Ian Bremner, president of Eurasia Group.