Capital Markets

A falling term premium suggests fixed-rate debt is a better bet for issuers; but the evidence is mixed. Backtesting shows that issuing floating-rate debt has been cheaper than fixed-rate for corporates over the long run. But the co-head of Deutsche Bank’s risk management solutions team for North America told treasurers at a recent NeuGroup meeting that floating-rate debt currently does not look nearly as attractive relative to fixed as it once did.  “Whatever you thought about fixed vs floating before,…

FX managers for the most part like their systems. But there’s always that one thing that creates a headache. Leo Tolstoy famously posited that “All happy families are alike; each unhappy family is unhappy in its own way.” That line from “Anna Karenina” can definitely be applied to treasury practitioners and their systems. In a discussion at a recent NeuGroup meeting jokingly dubbed the systems “misery montage,” three FX managers members shared their biggest pain points, most of which derive from…

Treasurers say they need specifics on market conventions to complete the SOFR risk puzzle. Many treasury teams don’t want any more bank presentations on Libor-SOFR transition timelines or the basics of risk and fallback language—they want details from bankers, regulators and industry groups on various market conventions. These include how exactly SOFR term rates will be calculated in the cash markets, specifics on any compounding methodology, settlement conventions like lookbacks, and the spread adjustment from Libor to SOFR.“We need details about the market…

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