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TIMPG members set priorities for October meeting.
Members of The NeuGroup’s Treasury Investment Managers’ Peer group recently came together in a meeting planning call to set the agenda for their peer group meeting in October. It’s perhaps not surprising that with US corporations currently holding record amounts of cash, members of the group were keen on evaluating how that cash is invested. Here's what they had to say.
August 27, 2010 -
What record-setting Johnson & Johnson issue says about the market.
Johnson & Johnson’s record-setting bond issuance last Thursday put even more pressure on corporate treasurers to time the market perfectly when issuing debt so as to beat the cost of funds of their peers. Triple-A rated, J&J is a formidable act to follow what with its $1.1bn of 10-year and 30-year bonds that had coupons of 2.95 percent and 4.5 percent respectively. It's a touch act to follow but here's one way it helps...
August 16, 2010 -
By Bryan Richardson
Determining the state of securities lending for US MNCs depends on whom you ask.
Determining the state of securities lending for US MNCs depends on whom you ask. What’s the best advice?
August 04, 2010 -
Does the current appetite for corporate bonds suggest a new risk paradigm?
Reading today’s “Heard on the Street” feature in the Wall Street Journal about spreads on IBM’s recent three-year, $1.5bn-debt issue narrowing to 25bps over Treasuries, and selling for a rate of 1 percent, we are reminded of a meme that circulated in European treasury circles during the ‘90s, if memory serves. It sought to make the case that high-quality corporate paper was indeed better than a lot of government paper—at least on a risk/return basis.
Now, with the IBM news...
August 04, 2010 -
Efforts to require 5 percent credit retention on ABS to be tested.
With the comment period for the SEC’s proposed changes to Reg AB closing today, the SEC will have to begin in earnest efforts to finalize rulemaking on securitization.
August 02, 2010 -
What’s on International Treasurer’s radar screen this week.
On the heels of stress testing banks in Europe, more attention is being paid to the balance sheets of Chinese banks.The recent IPO of Agricultural Bank of China, the last of the four largest Chinese banks to list, has also prompted reviews, since investors other than the Chinese government are on the hook for some of the risk. We will sort out the recent commentary and give treasurers some indication of what they can do.
July 29, 2010 -
Does news that FX market volumes are returning to pre-crisis levels mean it’s back to a flow business?
Throughout the financial crisis, FX trading volume dropped off markedly, although spreads more than made up for the flow declines. This in turn allowed major FX banks to still profit from FX trading. So with FX trading volumes coming back to pre-crisis levels, is currency trading going to again become a mostly flow business?
July 26, 2010 -
Do regulatory proposals for banks to add buffer capital in good times offer something for others?
A new consultative document released for comment by the Bank for International Settlements’ Basel Committee builds on earlier suggestions that banks build up or conserve capital during good times as a “buffer” to allow them to continue to extend credit in down turns. What are the broader ramifications of such an approach? Should other types of institutions also consider countercyclical capital structures?
July 19, 2010 -
Will more large-cap tech firms look to reign in CP reliance?
One of the takeaways from The NeuGroup’s Tech20 meeting at the end of April was Barclays Capital’s continued warning about too much reliance on short-term debt. While a year ago the Lehman lessons of rolling too much short-term debt and becoming a target for shorts were still fresh, now the concerns were more about other matters.
July 12, 2010 -
There really is no such thing as a sure thing. As of a few weeks ago Basel III, with its aggressive capital and liquidity requirements for banks, seemed to be as inevitable as the seasons. Likewise, US financial reform, i.e., Frank-Dodd, as of June 25 looked like a done deal after Congress pulled an epic all-nighter. But now after a couple of days, some G-20 dithering, a death in the US Senate and a suddenly wavering senator, things don’t appear to be so certain. To add to the uncertainty is worry that the world will fall into another recession. The impact of this uncertainty is also being felt in capital markets: according to a late June Bloomberg story “the percentage of corporate bonds considered in distress is at the highest in six months, a sign debt investors expect the economy to slow and defaults to rise.”
July 07, 2010 -
Implementing Basel III may be significantly delayed; will a death in the Senate torpedo Frank-Dodd?
There really is no such thing as sure thing. As of last week Basel III, with its aggressive capital and liquidity requirements for banks, seemed to be as inevitable as the seasons. Likewise, US financial reform, i.e. Frank-Dodd, as of Friday morning looked like a done deal after Congress pulled an epic all-nighter. But now after a couple days, some G-20 dithering, a death in the US Senate and a suddenly wavering Senator, things don’t appear to be so certain.
June 28, 2010 -
Equities got a quick boost from a stronger yuan, but US MNC treasurers would rather it be fully convertible than appreciating.
News of China’s new yuan flexibility regime has been played up in the financial press as reason for equities to rise. While MNC treasurers with significant earnings in China will enjoy the bounce, they probably know there is no reason to get too excited about the yuan yet.
June 21, 2010 -
The month of May saw the least amount of bonds sold by corporates in a decade, after a period of repeated records set for issuance. Companies issued just $66.1 billion of debt in May, the lowest since December 2000.
June 10, 2010 -
Is the world catching on to the fact that borrowing and spending isn’t working?
Finance ministers of the G20 have made clear that expansionary fiscal policy is no longer sustainable or effective in fostering economic recovery. As if to reinforce the idea that raising additional revenues to tempt further spending isn’t prudent, the G20 this weekend also scrapped ideas of a bank tax (affirmation of support for Basel III rules to be in place by November continues).
June 07, 2010 -
May sees corporate spreads widen, loan prices deteriorate and Libor turn higher.
“We should wait and see” may soon become “Why didn’t we jump on the bandwagon” as conditions in the capital markets deteriorate. Corporate treasurers who were holding off issuing longer-tenor debt as market spreads drew ever tighter in the fourth and first quarters may still find themselves justified in having done so. But the decline in investor risk appetite in May as the eurozone crisis intensified means for the time being at least conditions have become less favorable.
May 24, 2010 -
Attendees at the EuroFinance International Cash and Treasury Management Conference in Miami earlier this month had a mixed view of the future, according to an impromptu survey conducted at the conference. Borrowing conditions have improved, but treasury personnel remain cautious about financial services reform and, crucially, the shape of the economic recovery.
May 21, 2010 -
Despite investors' recent bad experiences, they buy potentially loser securities nonetheless.
Loan arrangers and investors are clearly feeling optimistic. Despite a bunch of silly deals in recent months--and the loan meltdown of the past two years--there have been some 16 transactions via Deutsche Bank, Barclays, Bank of America Merrill Lynch and GE Capital recently.
May 17, 2010 -
Looking to stop a worsening crisis, the EU, backed by world central banks, launches bailout plan.
Catching the egg before it hit the ground the European Union today announced a bailout package to halt a worsening sovereign debt crisis. The plan calls for the governments of the 16 euro nations, along with the IMF, to lend up 750bn euros, or more than $950bn, to the zone’s most troubled countries. World governments hope the action will squelch further sovereign debt contagion affects, what appeared to be the beginnings of a double dip in the global economy that so many have feared, and speculation that the eurozone might break up.
May 10, 2010 -
How three little words in a 1500-plus-page bill might save the dealers’ bacon.
There has been much whinging of late about how OTC derivatives dealers and major market participants could soon have to use clearinghouses and trade on exchanges. But despite talk of their lobbying horns being effectively sawed off the by Goldman Sachs’ multiple gaffes, it seems they’re not so impotent as to be unable to make a few innocuous-looking tweaks to the bill that could have an enormous effect on the derivatives market. Treasury personnel should take note.
May 03, 2010 -
The dealer's spreads widen sharply as it stock falls despite negligible default risk.
One of the most persuasive criticisms of credit derivatives is that they destroy information. That is, they release lenders from the necessity of understanding a borrower’s credit. According to this view, they are more of a “wisdom of the masses” poll—like electoral futures markets—rather than true barometers of a reference entity’s credit. And, like electoral futures, they are usually wrong. One data point supporting this view is the sharp widening of Goldman Sachs’ CDS spread this morning, despite no appreciable increase in its default risk and its recent blowout results.
April 26, 2010