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.…
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…
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…
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…
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…
February 23, 2021
Talking Shop: Yes or No When Moody’s Asks for Dealer Agreements?
Member question: “Moody’s is asking us to provide our dealer agreements for our commercial paper program. Historically we have not provided private agreements. Are you seeing this also and if so, are you providing the agreements? “For what it’s worth, Moody’s is saying they want it to see the settlement period language in the document. We have provided the private placement memorandum which contains the binding settlement language.“We have not provided the dealer agreement and are pushing back on the…
February 18, 2021
Swap Rates and the C-Suite: Making the Case for Floating-Rate Debt
Low fixed interest rates may make it harder—but not impossible—to convince management to swap to floating.Interest rates may be ticking up, but their historically low level is one reason some treasury teams may face difficulty convincing senior management to swap more of their company’s debt stack to floating rates from fixed. “It’s a hard time to argue to do it given where long-term rates are,” one NeuGroup member said at a recent meeting.“When the fixed-rate environment is this attractive, it’s…
February 16, 2021
Biden Tax Priorities May Fuel Shifts in Corporate Capital Structure
The effects of raising the corporate income tax rate and setting a global minimum tax on book income. Treasury and tax teams trying to plan for potential changes to US corporate tax policy will be looking for more clarity when President Biden addresses a joint session of Congress in one week, on Feb. 23. For a look at what corporates should have on the radar screen, NeuGroup Insights reached out to Justin Weiss, a partner in KPMG’s Washington national tax financial…
February 11, 2021
Supporting—Not Leading—the Green Charge: Defining Treasury’s Role
A discussion of green bonds includes the view that treasury “can’t push the cart up the hill” on sustainability.The steady drumbeat of enthusiasm about ESG from bankers, investors, rating agencies and the media has failed to convince some treasury teams to push their companies to jump on the green finance bandwagon. For one reason, these treasury practitioners say that issuing green bonds or using other forms of sustainability-linked finance does not currently make economic sense for them. More importantly, these…
February 11, 2021
Sending a Strong Signal: Accelerated Share Repurchase Programs
As more companies resume stock buybacks, some treasurers are feeling pressure to use ASRs.Corporates eager to send a clear signal to investors about their financial health are brushing the dust off stock buyback plans and weighing—if not committing to—accelerated share repurchase (ASR) programs. That was among the takeaways from a NeuGroup meeting of treasurers this week. It’s the latest development in a journey that began in the spring when the pandemic slammed the brakes on many share repurchase programs. In…