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Capital Markets

Capital MarketsLibor SOFR
December 15, 2021

Year-End Deadline for New Libor Deals Focuses Minds on Alternatives

Gazing into 2022, SOFR remains the first choice among borrowers, but may still require “mathematical gymnastics.”The year-end deadline for pricing new floating-rate transactions over Libor replacement rates and a steepening but uncertain yield curve prompted assistant treasurers from large-cap companies to tap the insights of rate and hedging experts from Chatham Financial at a recent meeting. Companies are looking to increase their floating-rate exposure compared to a year ago, generally because they are at the higher end of their fixed/floating…
Justin Jones
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Capital MarketsComplianceESG
December 15, 2021

Treasury’s ESG Angst Over Auditors and Credit Rating Agencies

Upper management wants ESG audits to be merged with overall financial audit, to some members’ dismay.Assistant treasurers (ATs) mulling renewals of their companies’ revolving credit lines next year compared notes in a recent meeting session on ESG-related issues, as those factors increasingly play a role in credit decisions—even if it’s unclear precisely how. One concern: There’s a push to merge ESG-related auditing with the overall financial auditing typically done by a Big Four accounting firm, a move the ATs frowned…
Justin Jones
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Capital MarketsCash InvestmentsCompliance
December 8, 2021

Pain You Can Manage and Pain You Can’t: Separately Managed Accounts

SMAs mean accepting KYC and legal dept. pain, but clear communication can save plenty of heartache with managers. Members joined forces for a panel discussion on the pain points associated with setting up, maintaining and reporting for separately managed accounts (SMAs) at a recent meeting of NeuGroup for Cash Investment. Not surprisingly, the most painful parts are the know-your-customer (KYC) obligations and the legal agreement tug-of-war needed for account setup. The encouraging, somewhat unexpected takeaway: Effective communication and a strong relationship…
Justin Jones
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Capital MarketsTreasury Management
December 8, 2021

Trading with Real Money: Good Schooling for Future Finance Talent

Corporates give high marks to a University of Idaho program where students learn real-world lessons by trading.Treasury and finance teams searching for talent with the right stuff—and an edge in this tight labor market—might want to take a page from Starbucks and Micron Technology by strengthening their ties to colleges and universities that are finding innovative ways to teach students financial decision-making skills. Micron treasurer Greg Routin and Melanie Canto, a former Starbucks treasurer who is now a senior business transformation…
Justin Jones
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Capital Markets
December 1, 2021

Using a Framework to Level a Fixed- vs. Floating-Rate Debt Imbalance

The case for having a programmatic, market-agnostic approach to keep floating-rate debt at a desired level.The vast majority (88%) of corporates polled (see below) at a recent NeuGroup for Capital Markets meeting sponsored by Deutsche Bank are above their target percentage of fixed-rate debt relative to floating-rate; but nearly two-thirds (63%) of the companies either don’t plan to make significant changes (42%) to their fixed-to-floating-rate ratio in response to the current market environment, or they aren’t sure about it (21%).…
Justin Jones
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Capital Markets
November 17, 2021

Cloning and Cleaving: The Successful Execution of a Complex Spin-off 

Capital markets insights from a NeuGroup member’s journey helping spinning off businesses intertwined within the parent.Not all spin-offs are created equal—a lesson brought home powerfully to one NeuGroup member who helped their company successfully navigate a large, complex, nearly two-year spin-off of three product groups that did not formerly exist as stand-alone businesses and were not managed as a group by the parent company. “These products were fully intertwined across every aspect of the business,” they said. So were the systems…
Justin Jones
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Capital MarketsESG
November 17, 2021

Weighing the Impact of Inflation and ESG on Tech Credit Ratings

Credit rating agencies sit down to weigh in on hot topics with Tech20 treasurers at the annual breakfast panel.Each year, members of NeuGroup for Tech Treasurers sit down with tech sector analysts from S&P, Fitch and Moody’s to discuss their pressing questions for the credit rating agencies. This year’s conversation revolved around the hot topics of inflation and ESG. One important takeaway: there’s not much for tech companies to worry about (yet). The chief lending officer at meeting sponsor BNY Mellon moderated…
Justin Jones
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BankingCapital Markets
November 10, 2021

Stars Aligned for Now on Bank Subordinated Debt, Preferred Stock

Morgan Stanley says regional banks should consider moving up offerings to this year given volatility risk. Regional and mid-cap banks are looking to raise capital, whether to refinance existing debt, buy back stock or support balance sheet growth, and the market is hot—at least for now, according to Morgan Stanley bankers presenting at a recent meeting of NeuGroup for Regional Bank Treasurers. But volatility in the aftermath of last week’s Fed meeting could prompt institutional investors to pull back.So banks considering…
Justin Jones
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Capital MarketsESG
November 10, 2021

Extra Credit: Energy Companies Issuing Debt from Green Subsidiaries

Bonds issued by energy company transition business units are preferred by debt investors who screen for green.Bonds issued by entities within energy companies that are focused on low- or no carbon emission projects and technology are far more likely to appeal to some asset managers than debt issued by the holding company. That takeaway emerged at a recent meeting of NeuGroup for Oil & Gas Treasury sponsored by Societe Generale during a session that featured two debt investors, one representing…
Justin Jones
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Capital MarketsESG
November 3, 2021

Drilling for Clarity on How ESG Factors Influence Credit Ratings

Oil and gas sector analysts are scrambling to explain to energy companies the link between ESG scores and credit risk.The momentum behind ESG mandates and the conviction that companies committed to sustainability represent better investment risks have put pressure on ratings agencies to reconcile traditional credit ratings with ESG scores. This reconciliation has become more challenging as the agencies themselves begin to offer ESG scores or ratings as well as sustainability assessments. One approach is to explain in more detail…
Justin Jones
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