Thank you to Bank of America Merrill Lynch for sponsoring and hosting the fall meeting of the Engineering & Construction Treasurers Peer Group in Chicago.
The member-driven agenda included topics such as security, US regulatory impact on capital markets and bank business models, public and private bond placements, acquisition integration, treasury strategy planning, the use and growth of card programs. Here are a few highlights from the very active discussions:
“Common Sense is the Best Protection against Fraud” says BAML’s Milton Santiago who gave an eye-opening presentation on security in ecommerce and banking. The weakest link in fraud protection is typically companies with inadequate controls and not the banks. Having robust controls to prevent fraud can also stop most phishing, smishing and other hacker attacks. While members remain timid on adopting mobile means for treasury transactions, Milton interestingly noted that annually, $8.1 trillion in B2B transactions are being settled with mobile applications today.
Rating Agencies & Road Shows – A member-led session described their forays into the public bond market, including the process and the many lessons learned. One particular point was emphasized - “do not assume that rating agencies are easy to deal with.” Both S&P and Moody’s were engaged to review and rate the inaugural bond issuance which raised acquisition capital. In comparison, another member used a Canadian rating agency (DBRS) familiar and friendly with the E&C industry to obtain a favorable private rating for a bond placement to support their acquisition. Both members did road shows to attract investors.
2018 is Fast Approaching – Forget the long lead time (2018) on the proposed US regs for bank capital requirements. According to BAML’s Bill MacDonald, banks are already calculating the impact today. And the affect on available capital and banks business models, if passed as is, is “very significant”. Bill gave a rather dismal view of the impact of proposed liquidity and leverage ratio requirements on GSIB (globally systematic important banks), and he noted that he has already seen nine large industrial deals in the last 90 days that banks have walked away from. Given this pressure, key relationships and share of the wallet will be of primary importance.
The NeuGroup Network’s Engineering & Construction Treasurers’ Peer Group (E&CTPG) bring together treasurers from the largest multinational companies in the engineering and construction industry to share experiences and best practices with their peers. E&CTPG is one of 15+ NeuGroups (www.neugroup.com) representing more than 300 members at 180+ companies.