Multinational public transport company National Express has scooped the Small UK Treasury Team of the Year award after a highly successful year in which the team redefined its debt-distribution profile, tapping a number of debt-capital markets at new benchmark levels.
This year marks a double win for ACT CPD-accredited employer National Express, whose treasury manager, David Plimmer, won the Emerging Treasurer of the Year award.
The National Express treasury team’s year got off to a rapid start, having pre-funded its £350m bond maturing in January through the use of a £350m bridge-to-bond and subsequent issuance of a £400m seven-year bond in November 2016, paying a coupon of 2.5%.
Shortly after that, the team turned its attention to bank funding, raising $260m in short-term bank facilities at an all-in cost of 4bps. Its clear-sighted approach was to make use of the cross-currency swap market to access the prevailing negative Euro Interbank Offered Rates that aren’t widely accessible with a regular bank facility.
Through the effective use of both bank funding and the bond markets, National Express’s treasury team has ensured the company is successfully bridged against the uncertainties surrounding Brexit through to the end of 2019
Later in the year, the treasury team issued a €250m 2.5-year senior unsecured fixed-rate note. The issue went out in November at €3m + 40bps and was achieved at a record level – the lowest spread ever achieved for a BBB- issuer.
This transaction has aligned the group’s maturity profile with its £225m bond due in 2020, positioning National Express for a benchmark fundraising exercise in the future.
Through the effective use of both bank funding and the bond markets, National Express’s treasury team has ensured the company is successfully bridged against the uncertainties surrounding Brexit through to the end of 2019.
National Express’s nomination noted the team’s innovative approach to managing financial risk, introducing a new biodiesel hedging programme by transacting directly with a multinational oil producer, since banks were unwilling to hedge in this market.
Simultaneously, the team developed a dynamic fuel-hedging tool that identifies the most appropriate derivative instrument for its North American school bus and transit divisions. The tool ensures both R-Squared and Slope hedge-accounting metrics are achieved for its diesel and gasoline exposures.
Both the biodiesel hedging programme and the fuel-hedging tool are initiatives that have reduced risk for the business in a controlled and cost-efficient way.
In addition, the team worked to integrate its treasury management system with its electronic banking platforms, which means the team can move away from spreadsheets and fully use the system’s cash-positioning functionality. It has also worked on real-time reporting to monitor counterparty exposure.
All these initiatives came during a transformative year for National Express as the company completed its full withdrawal from the UK rail market, marking the departure of what had been one of the biggest names in the British railway sector.
This called for numerous challenges to be overcome, including:
“National Express’s record as a high-achieving team committed to high standards and innovation is justly rewarded with this win.”
The Treasurer's Deals of the Year Awards recognise the outstanding work of treasurers, both within the treasury community and the wider business world. Through them we champion the success and achievements of treasury teams that have stood out in the market over the prior 12 months. Winning an award is a great way to strengthen your organisation's and your treasury's profile, bringing peer and industry acknowledgement. Find out more here.