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Capital Markets

Capital MarketsRisk Management
December 20, 2023

Don’t Ignore the Halo Effect in Credit Ratings for Subsidiaries

Why ratings used to set rates for intercompany loans should factor in ‘ordinary’ support parents provide subsidiaries. The internal credit ratings of subsidiaries that a parent company may use to help determine the interest rate for an intercompany loan need to reflect a halo effect that incorporates any day-to-day, ordinary support the subsidiary receives from the parent. That is among the key takeaways from a presentation by Societe Generale at a recent meeting of NeuGroup for Mega-Cap Assistant Treasurers sponsored by the…
Justin Jones
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Capital MarketsRegionalRisk Management
November 29, 2023

Recession and Rates Rank High on Treasurers’ 2024 Risk Lists

New NeuGroup Peer Research reveals the risk of an economic downturn and high interest expense loom large. As treasurers look ahead to 2024, the results of the NeuGroup 2024 Finance and Treasury Agenda Survey reveal two intertwined risks—headwinds which may also appear at odds with each other—looming on the horizon: the continuing threat of recession, paired with interest rates that may remain higher for longer. Normally, of course, economic weakness brings about lower rates. But the last few years have…
Justin Jones
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Capital MarketsRisk Management
November 16, 2023

Natural, Synthetic, Go Now, Not Yet: Exposure to Floating Rates

Corporates weigh when to swap fixed-rate debt to floating as inflation cools and the rate outlook shifts. Growing conviction that the Federal Reserve is at the end of its interest rate hike cycle and may cut rates next year has turned up the heat on the simmering issue of whether and when corporates with debt should swap some of their fixed-rate exposure to floating rates. Many companies in the NeuGroup Network say nearly all their debt is fixed—a byproduct of very low…
Justin Jones
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Capital Markets
November 8, 2023

PE Firms’ Hunt for IG Assets May Feed Corporates Seeking Capital

Deutsche Bank on what corporates need to know when Apollo and other PE firms that own life insurers come calling. Private equity (PE) firms that control the balance sheets of insurance companies are actively seeking investment-grade (IG) assets, a trend that’s unlocking a flexible and customizable source of alternative capital for some corporates—including those that considered PE firms largely irrelevant to them except in cases of outright asset sales. “This is a now a new option in the toolkit that…
Justin Jones
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Capital Markets
October 25, 2023

Mixed Signals: Do Recent Unicorn IPOs Mean the Window Is Open?

Recent IPOs of unicorns ended a nearly two-year drought, but CFOs and market participants don’t expect a flood—yet. The September IPOs of Arm Holdings, Klaviyo and Instacart ended a long drought of debut stock offerings from so-called unicorns—privately held startup companies that have reached a valuation of $1 billion or more. NeuGroup for Growth Company CFOs brought together chief financial officers of other fast-growing firms, including some unicorns, to discuss whether the recent crop of IPOs means corporates that have been standing by for the…
Justin Jones
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Capital MarketsInvestment Management
October 19, 2023

Reverse Repo: A Safe Haven for Cash Amid Financial Turbulence

Attractive yields and safety are two reasons some corporates are investing directly in reverse repos. Turmoil in the banking sector earlier this year sent shockwaves through corporate treasuries, triggering widespread reviews of credit risk policies and changes in how cash investment managers think about counterparty limits for unsecured exposure to banks. As these managers continue to seek both safety and healthy yields, reverse repurchase agreements, also known as reverse repos, are drawing increased attention globally. And no wonder: they offer corporates an additional layer…
Justin Jones
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Capital MarketsRisk Management
September 21, 2023

Corporates May Need to Add Sugar to Recipe for Bonds Funding M&A

Investors may demand better terms in special mandatory redemption clauses amid longer deal review times and rate cut risk. Treasury teams structuring bond deals to fund M&A transactions who want to lock in rates before an acquisition closes may need to sweeten the terms of a clause in bond offerings called a special mandatory redemption. The key reason: increased risks for investors stemming from longer regulatory reviews of mergers and the possibility that deals fall apart. SMRs typically require an issuer…
Justin Jones
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Capital MarketsRisk ManagementTechnology
August 23, 2023

Focal Points: Tech and Risk Among Treasurers’ Top 10 Priorities

NeuGroup meetings in 2023 H1 offered unique insights into critical concerns for treasury teams in the months ahead. Hundreds of members of NeuGroup’s treasury peer groups met during the first half of the year to discuss a multitude of critical topics they face and share their main priorities for 2023. While the groups vary in company size, member titles and geography, 10 themes dominated the conversations in NeuGroup’s singular projects and priorities sessions. Here’s what’s top of mind: 1. Modernizing…
Justin Jones
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Capital MarketsInvestment Management
August 9, 2023

Gear Shift: Cash Investment Managers Eying Eventual Rate Cuts

With the end of Fed rate hikes in view, some managers are now talking about extending investment duration. When 2023 began, corporate cash investment teams were battening down the hatches, keeping maturities very short in anticipation of more interest rate hikes. Almost eight months later, the discussion has shifted to when the Fed might start cutting rates, leading to a flatter and eventually steeper yield curve, opening the door to extending duration. “Short-term rates may exceed or be more optimal than investing…
Justin Jones
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BankingCapital MarketsTechnology
June 22, 2023

Best of NeuGroup Insights, First Half of 2023

Technology, the banking crisis and uncertainty about interest rates created challenges and opportunities for treasury, FP&A and other finance teams, reflected in these top-10 posts, which include a podcast and a video. Telling topics. The 10 most popular posts from NeuGroup Insights from the first half of 2023 provide a clear window into how finance teams throughout the Office of the CFO—such as treasury and FP&A—have stepped up this year and managed new, complex risks posed by the banking crisis…
Justin Jones
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