Capital MarketsCash & Working Capital
May 6, 2021

Moving Target: A Growing Company’s Capital Structure Matures

MUFG helps a high-growth tech company shift from convertibles to a financing mix more in line with an IG credit.The optimal capital structure for a high-growth technology company may change significantly as its business develops and its financing options increase—one reason corporates that issue convertible bonds early in their trajectory often replace them with alternatives more suited to mature businesses with investment-grade (IG) credit metrics or ratings. That takeaway sprang from a session at a recent meeting of NeuGroup for…
Capital MarketsD&I
April 29, 2021

Gaining Ground on the Road to Diversity in Capital Markets Deals

NeuGroup members discuss details of including firms owned by minorities and women in debt and other transactions.Talk about timing. Members of NeuGroup for Capital Markets discussed diversity and inclusion (D&I) in capital markets transactions on the same day 11 firms owned by women, minorities and veterans joined Deutsche Bank Securities in closing a $750 million bond underwriting for the bank. The role of the 11 firms—which received about 60% of the fees—underscores the momentum of the movement among banks and corporates to…
BankingCapital Markets
April 27, 2021

Deal Defense: Building a United Front When Debt Underwriters Grouse

The weeks and days leading up to the sale of a company’s debt can be nonstop crazy. Then there’s the bank group. After weeks of extremely busy days, late-night phone calls and early morning meetings, you’re just days away from a multibillion-dollar debt issuance. The phones are ringing and one (or more) of the calls is from a co-lead bank, still complaining about its share of the deal. After you manage to get off the phone, they call your boss…
Capital MarketsESG
April 22, 2021

A Virtuous Cycle Including Treasury Bolsters Sustainability Efforts

Building a framework sets the stage for green bonds—an umbrella to systematize initiatives. Increased scrutiny of corporate sustainability efforts by investors and other stakeholders has made it essential for companies to place ESG initiatives into a clear framework.   Building the framework to coordinate decisions and address investor inquiries more effectively requires communication among key parts of the company, with treasury playing a critical role.These were among the takeaways from a recent meeting of NeuGroup for Capital Markets sponsored by Wells Fargo…
Capital MarketsNeugroup
April 15, 2021

Fond of Fitch: Ratings Agency Gains Fans and Respect in Treasury

Members of NeuGroup for Capital Markets praise Fitch analysts and a ‘ratings-through-the-cycle’ approach.For decades, Fitch Ratings has been the third ratings agency—behind Moody’s and Standard & Poor’s—used by Fortune 500 corporates that want to ensure they maintain the two investment-grade ratings necessary to remain in the Bloomberg Barclays Bond Index. That may be changing.   At a recent meeting of NeuGroup for Capital Markets, members said they have been impressed with Fitch’s analysis over the past few years, and especially…
BankingCapital MarketsSenior Executive
March 16, 2021

No Sale: Convertibles at Great Prices Fail to Impress IG Corporates

Companies rated investment grade expressed reluctance to issue convertible bonds, despite favorable conditions. It can be a nonstarter to raise the topic of convertible bonds with treasurers at investment-grade companies that can already issue debt with very low interest rates and don’t want their stock diluted when investors convert bonds to equity. But many NeuGroup members whose companies have high credit ratings, including some at a recent meeting of NeuGroup for Capital Markets, say all their banks have pitched convertibles.…
Capital AllocationCapital MarketsCash & Working Capital
March 11, 2021

Do Stock Buybacks Create Value or Just Return Capital to Investors?

Members at companies with excess cash discuss whether share repurchases generate economic value for shareholders.ConocoPhillips on Wednesday announced it is resuming its share repurchase program, citing its “long-standing priority to return greater than 30% of cash from operations to shareholders annually.” The company is not alone: A recent NeuGroup Peer Research Survey showed that 82% of respondents consider the return of excess capital the primary objective of their company’s share repurchase program. Only 9% said creating shareholder value was the…
Capital MarketsTalking ShopTechnology
March 9, 2021

Talking Shop: A Fintech Collects Capital Markets Pricing Data

Background: Members of NeuGroup for Capital Markets recently heard a presentation from InterPrice Technologies, a woman-owned fintech that collects pricing data for issuers. The company says its platform gives corporates access to their costs of capital “at any point in time and streamlines their communication with financing partners.” The technology “automatically aggregates bond, commercial paper and loan indications into intuitive dashboards across currencies and financing products,” InterPrice says.InterPrice on Monday announced it has raised $2.5 million in seed money led…
BankingCapital AllocationCapital Markets
March 2, 2021

A Third Path for Stock Buybacks: Enhanced Open Market Repurchases

Some NeuGroup members have turned to eOMRs to get the flexibility of OMRs and pricing below VWAP, like ASRs.Many NeuGroup members across groups at recent meetings agreed they have enough excess liquidity and trust in market stability to restart share repurchases; but there has been a range of views about how much emphasis to place on the price per share a corporate pays for its own stock. Where companies fall on the spectrum of answers may determine if they opt…
Capital AllocationCapital MarketsESG
March 2, 2021

Getting Granular on Green Bond Proceeds: Capex? Opex? Both?

Some investors prefer that green bonds finance capex projects, but corporates use proceeds for opex, too—with caveats.How a corporate intends to spend the proceeds from a green bond is integral to deciding whether to issue the bond in the first place. You need to have sufficient uses to create a deal that is large enough to make the costs worthwhile and ensure that investors will participate. NeuGroup members at a recent ESG working group meeting addressed a related, more granular…