Revisions to the information made available to lenders in takeovers has been agreed. The UK Takeover Panel’s new guidelines follow discussions with the Loan Market Association (LMA) and the London Investment Banking Association (LIBA) on the disclosure of information to potential lenders to a company or other persons involved in a takeover offer subject to the UK’s City Code on Takeovers and Mergers.
Liquidity is still fragile for European corporate issuers according to research by Moody’s. Around 84% of the issuers should have internal and external sources of liquidity to cover the next 12 months’ debt maturities and other cash outflows, but Moody’s says the trend is deteriorating, particularly in the speculative-rating range.
A new qualification, which will provide invaluable skills in treasury management for the public services, is being launched by the ACT and the Chartered Institute of Public Finance and Accountancy (CIPFA).
Last year’s big drug deals are helping inject life into the heftier end of the eurobond market. Novartis, the pharmaceuticals giant, has launched a seven year E1.5bn eurobond paying 4.25% with a spread of 95 basis points over midswaps.
The deal follows last year’s $11bn acquisition of a 25% stake in eye-care company Alcon from Nestlé which came with an option to buy Nestlé’s remaining 52% holding in 2010 at an as yet undetermined price.
With some signs starting to emerge that the worst of the financial crisis might be behind us, the regulators and politicians can now move on from fire fighting to legislating for the future shape of the financial world. The authorities want to be seen to be doing something, acting tough and acting fast. But while things will clearly be different in the future, the regulators need to take care their acts do not have the sort of unfortunate unintended consequences already occurring. For example, creating a complete replacement for the IAS 39 standard within a year or so (see p13) is a tall order for the IASB, while in the US some politicians want to outlaw tailored derivatives (see p12). At least the Bank of England is trying to find constructive ways to help companies with their financing (this page).
Labour had avoided the boom/bust economic cycle over much of the last 12 years, but credit-fuelled growth ended this prolonged period of stability. Dennis Turner sees a long slow climb back to prosperity in 2010, with either public spending cuts or higher taxes inevitable, and a boost to manufacturing vital. As the election looms, the main parties must set out their stalls.
Should treasurers and pension fund trustees look for a fresh approach to investment and alternative investments?
The May issue of The Treasurer reported on a rush of rights issues that marked the opening weeks of 2009 and pointed out the danger of investor fatigue setting in. But even though the first four months of this year saw rights issues with a combined valueof £30bn announced, there has been no sign of any slowdown so far. In recent weeks, retailers, property groups and miners are among a "second wave" of companies seeking the favour of investors.
The UK’s complex tax system is ripe for change, but its technical nature makes it difficult to simplify. Small adjustments, such as the cap on UK subsidiaries’ tax reductions for interest payments, rouse controversy, while developments like the new Corporation Tax Act only exacerbate a problem worsened by the recession.
With interest rates at record lows, the equity markets riven by uncertainty and volatility, and a greatly subdued risk appetite, interest in corporate bonds as a retail investment vehicle has grown dramatically across Europe. But in the UK issuers of corporate bonds may be missing out on a massive untapped retail investor market. The retail market could provide a large pool of capital, represents an investor base that holds bonds to maturity, and holds out the prospect of lower costs of capital funding over a period of time. The picture is almost too good to be true yet the retail sector in the UK is largely ignored.
J.P. Morgan Asset Management has just launched its latest annual investigation into the workings of the cash management industry, with the Global Cash Management Survey 2009.
Cash forecasting has taken centre stage in the current downturn, with organisations of all sizes and types needing to know how cash is flowing through their businesses. There can be no apologies for ensuring that finance professionals at all levels of experience be able to understand and communicate the straightforward principles and benefits of cash forecasting and management. Indeed, treasury professionals have a unique opportunity to engage with all aspects of their organisations’ activities, whether cashflows are inwards or outwards.
Typically, companies identify three sources of price risk: interest rates, foreign exchange and commodities. In almost all cases, interest rate and FX risk is hedged through derivative contracts. However, commodity risk is not always hedged, with the
company often deciding to remain exposed to that risk.
The ACT annual pensions conference, co-sponsored by Hewitt and the Royal Bank of Scotland, heard from treasurers, regulators, bankers and the pension industry as the day explored both today’s challenges and tomorrow’s opportunities.
The development of the treasury profession in the Middle East is gaining momentum, allowing members and practitioners to reap the benefits of advanced professional education and critical networking opportunities.
Treasurers need to ensure that relationships with debt providers are integrated into their overall investor relationship management programmes.
For businesses with access to the funds, debt buybacks can prove very cost-effective, with “fire-sale” prices sometimes as low as 15%. But controversial deals to buy back distressed debt have led to questions over whether they are legally effective, and the wording of agreements has been put under the spotlight.
The Loan Market Association revised its recommended forms of facility agreement for investment-grade borrowers in April. Good news for borrowers includes tax gross up protection and a yank-the-bank provision, but most of all an explicit confidentiality undertaking.
An engineering and construction contractor to the offshore oil and gas industry almost paid the ultimate price for an ambitious expansion programme.
Group Treasurer, Bente Salt tells.
No one in treasury would deny that the past 12 months have been rather eventful, and significantly increased the profile of corporate treasury within organisations. But while workloads have risen, treasury departments have still had budget restrictions placed on recruitment.
