BankingCapital Markets
November 19, 2020

Monetization Magic: How Using a Hybrid Solved an Asset Riddle

MUFG helps one mega-cap use structured preferred shares to monetize a “difficult” asset.In a session at the recent NeuGroup Tech20 annual meeting—the 20th annual no less—a guest speaker from a mega-cap communications company shared how his treasury found a great deal of success using structured preferred shares to monetize previously untapped assets on its balance sheet. All while managing its net debt within a target leverage ratio, with the assistance of meeting sponsor MUFG. Structured preferred shares are a type of…
BankingLibor SOFR
November 17, 2020

Replacing Libor: No Criticism for Banks That Say ‘No Thanks’ to SOFR

Regulators say banks can price loans using any appropriate reference rate as they prepare for Libor’s end.You may possibly have missed a development that happened three days after the presidential election: US banking regulators gave banks more confidence they can decide to use Libor-replacement rates other than the secured overnight financing rate (SOFR), which the Federal Reserve has endorsed but that some regional banks view as problematic. “Examiners will not criticize banks solely for using a reference rate, including a…
BankingLibor SOFRRisk Management
November 12, 2020

Mismatched Hedge Risk: Derivative Values May Change as Libor Ends

Standard Chartered, helping corporates prepare for risk-free rates, describes the potential risk of “valuation jump.”The replacement of Libor by risk-free rates (RFRs) like the secured overnight financing rate (SOFR) in the US and the sterling overnight indexed average (SONIA) in the UK has been a hot topic at NeuGroup fall meetings where banks, regulators and other experts have been helping members prepare for Libor’s planned demise at the end of 2021. At a second-half meeting of the Asia Treasurers’ Peer…
BankingCapital Markets
November 10, 2020

Time to Talk Revolving Credit as Signs of Recovery Emerge

Banks are eager for business as loan markets improve and more M&A dialogue takes place.Debt and loan markets are still in repair mode as they were back in April, so it’s time for corporates to talk to their relationship banks about their credit needs, particularly as it relates to revolving credit. That’s according to Jeff Stuart, EVP and head of capital markets at U.S. Bank.Revolver trends. Mr. Stuart, presenting his view of revolvers and more at NeuGroup’s Assistant Treasurers’ Leadership…
BankingTalking Shop
November 10, 2020

Talking Shop: Should You Bank Where Your Customers Bank?

Member question: “This question is about the cultural practice of banking where our customers bank. With today’s technological abilities this makes no sense to me. Do other companies have this practice? Has anyone had success in changing this behavior pattern of banking where your customer banks? “The example I am currently dealing with is in Korea, where large customers use and although they are not a preferred bank partner, we seem to be using them because these customers bank there…
BankingRegionalRisk Management
November 3, 2020

Preparing for More China-US Tension, New Current Account Rules in India

Key takeaways from the Asia Treasurers’ Peer Group fall meetings sponsored by Standard Chartered.By Joseph NeuIndia ties current accounts closer to credit relationships. Members wanted clarity on a Reserve Bank of India (RBI) circular released over the summer that seeks to restrict current accounts to banks with which companies have a local credit relationship—subject to thresholds. Standard Chartered’s presentation explained that going forward, banks cannot open a current account for a customer who has “availed” a cash credit or overdraft…
BankingCapital Allocation
October 29, 2020

Time for Bonds: A Growth Company Learns the Ropes of Issuing Debt

A debut bond offering reveals the benefits of preparation in working with rating agencies, banks and the C-Suite.Eight years after going public, one NeuGroup member company planned to refinance equity-linked capital with straight debt—in the middle of the pandemic. It successfully completed the issuance, and at a recent NeuGroup meeting the company’s treasurer described a process that was challenging at times but ultimately proved rewarding. Along the way, the treasury team—which had never issued straight bonds—learned valuable lessons, including the need…
BankingCapital MarketsFX
October 27, 2020

Looking Into the Capital Markets Crystal Ball: Trump vs. Biden

Uncertainty over the outcome after election day means more volatility, potential opportunities. Whether it’s Donald Trump or Joe Biden sitting in the Oval Office next year, many capital markets prognosticators expect the US economic recovery to remain on track and the Federal Reserve to keep interest rates low—relatively good news for investment-grade companies selling more debt, but troublesome for treasury investment managers searching for yield. Beyond that, things get more complicated. A European bank that recently sponsored a NeuGroup meeting of…
October 22, 2020

Digital Signatures Deliver Relief and a Few Frustrations Amid Pandemic

Corporates report success using DocuSign with many banks, but Latin America presents challenges.“Has anyone successfully used DocuSign with banks?” one NeuGroup member asked at a recent virtual meeting. “Yes” was the resounding answer from peers—more evidence that the pandemic has accelerated automation and digitization in finance. And one goal for many treasury teams is to make “wet” signatures a thing of the past. The member who posed the question wants to use DocuSign’s electronic signature solution internally and externally—for intercompany…
BankingCash & Working CapitalRisk Management
October 20, 2020

How Corporates Are Measuring Counterparty Risk as Cash Builds

Companies reviewing limits amid Covid have varied approaches to calculating risk thresholds.The abundance of cash corporates have collected on their balance sheets to deal with pandemic-related volatility has prompted some to review their counterparty risk limits.Participants at a recent NeuGroup meeting of large-cap companies described a variety of approaches to the issue, which should remain especially relevant for treasury teams reducing the size of bank groups, a trend discussed in recent meetings.  A member explained that higher deposit rates at…