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…
Capital MarketsTechnology
November 19, 2020

Counterparty Transparency: ‘Looking Through’ Money Market Funds

How a treasury investment manager finds out what assets are owned by the MMFs he owns. For treasury investment managers, visibility into the credit and counterparty risks of their portfolios is essential, especially during times of heightened volatility and uncertainty—like the last nine months. One member of NeuGroup’s Treasury Investment Managers’ Peer Group 2 told peers at a recent meeting sponsored by DWS that part of his assessment of counterparty risk involves “looking through” money market funds (MMFs) to see their…
Capital AllocationCapital MarketsCash & Working Capital
November 17, 2020

Game Plan: Opportunistic Buybacks on the Open Market vs ASRs

Meeting sponsor SocGen sees corporates growing comfortable with flexible, open market buybacks amid recovery.During the global pandemic, many corporates have slammed the breaks on share repurchase programs to save cash and avoid criticism from politicians as Americans lost jobs and some companies sought government bailouts. At a recent NeuGroup meeting of treasurers at life sciences companies, Societe Generale’s David Getzler, head of equity capital markets for the Americas, forecast an increase in share buybacks in 2021 as the economy recovers and…
Capital MarketsTalking Shop
November 17, 2020

Talking Shop: Applying the End-User Exception From Dodd-Frank’s Swap Clearing Mandate

Context: In 2013, section 723 of The Dodd-Frank Act went into effect, which required all commercial end users of swaps to submit the swap to a derivatives clearing organization. A so-called “end-user exception” allows parties to claim exemption from the clearing mandate and continue executing uncleared swaps with their dealer counterparties if one of them: Is not a financial entity.Is using the swap to hedge or mitigate commercial risk.Provides certain information to the CFTC, including how it generally meets its…
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…
Capital MarketsTechnology
November 5, 2020

A Technology Tool to Help Corporate Bond Issuers

BondCliQ’s solution can give companies more insight into which dealers are supporting secondary trading. A lack of liquidity in the secondary market for investment-grade corporate bonds remains a source of frustration for many corporates that have issued record amounts of debt in the wake of the financial crisis and, more recently, during the pandemic. A key reason for the liquidity problem is that broker dealers, including underwriters, have reduced their inventories of investment-grade corporate debt, in part because of regulations mandating…
Capital MarketsInvestment Management
October 29, 2020

Nice Fit: A Matched Portfolio With a Hybrid Management Model

The benefits for one corporate of matching portfolio cash flows to debt payments and using internal and external managers.Matching assets and liabilities, a staple of pension fund managers, is central to how one NeuGroup member runs his technology company’s treasury investment portfolio—or at least a big chunk of it. At a recent NeuGroup meeting, the member explained the benefits of the matched portfolio strategy as well as the advantages of what the company calls a hybrid management model—using internal managers…
Capital MarketsLibor SOFR
October 29, 2020

Will You Be Ready When Libor Is No Longer “Representative”?

Preparing for fallback language that could be triggered when a UK regulator deems Libor non-representative.The global pandemic has not slowed the march toward Libor’s demise, scheduled for the end of 2021. And corporates have a lot to do long before then. Just last week, ISDA launched a fallback supplement and protocol, marking what it called a “major step” in reducing the impact of Libor becoming unavailable “while market participants continue to have exposure” to it.The supplement includes “robust fallbacks for…
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…
Capital MarketsESGRisk Management
October 27, 2020

The ESG Evolution: Finding Each Corporate’s Starting Point

Treasury’s role is critical as ratings agencies translate financial soundness into ESG readiness.Credit rating agencies face daunting challenges, not only with old-fashioned credit ratings, but also their efforts to gauge corporates’ environmental, social and governmental (ESG) status. In fact, corporate treasury’s approach to the former can significantly impact the agencies’ views on the latter, according to Karl Pettersen, managing director and chief sustainability officer and the head of ratings advisory at Societe Generale. ESG rating and scoring firms, some of…