What's Neu - News from the The NeuGroup Network of Peer Groups

Blog entry
By thoward, March 14, 2017
In this month’s iTreasurer, we look at how to structure the portfolio with interest rate rises looming on the horizon, as well as an examination of a relatively unknown part of supply chain finance called trade credit insurance. In between we delve into potential flies in the ointment when it comes to M&A and a possible repatriation holiday.
 
Beginning on page 1, contributor Barb Shegog discusses portfolio strategies in an environment of rising rates. But also critical is not waiting for rates to rise before you make these adjustments. Whether the money is managed inside or outside, or in whatever instrument, make a move now and be sure the result is a flexible portfolio. “There is no more sitting on the sidelines to see how things play out. So waiting for rates to rise isn’t really an option anymore,” Ms. Shegog writes. Or for that matter, sticking to assets that haven’t risen in a while, like T-bills and repos, both of which have spent much of December and the beginning of the new year at subdued levels.
 
On page 6, iTreasurer highlights Standard & Poor’s view that despite a good M&A outlook, what could pose a challenge are antitrust forces. “[U]nder a holistically less stringent regulatory backdrop, antitrust enforcement will likely remain a hindrance to specific large transactions” this year, S&P said. The rating agency goes on to say that this could have negative credit implications, “particularly if better credit quality was an anticipated outcome of the transaction.”
 
Our peer group meeting summary this month is from the NeuGroup’s Treasury Investment Managers’ Peer Group or TIMPG. Corporate investment managers have a host of issues to be concerned about, among them low rates, floating NAVs, credit issues and new MMF regulations. In this uncertain atmosphere, members—along with their compatriots in the market—have been left to ponder where to put cash next.
 
On page 11, iTreasurer delves into a small corner of supply-chain finance called commercial credit insurance, also known as accounts receivable insurance. Commercial credit insurance is the working-capital credit instrument that protects against counterparty default or simple nonpayment in the supply chain. Treasurers are finding that the supply chain can offer companies and their treasurers multiple platforms to facilitate consistency and liquidity. Yet underneath the new technology there remains a core question to answer for the supply chain to work. What is the most efficient source of credit to enable the supply chain?
 
Finally on page 15, in “Repatriation: Careful What You Wish For,” iTreasurer takes a look at a report on some of the possible downsides of repatriation. That’s because repatriation might result in “substantial share-repurchases that would have an immediately negative credit impact if they hadn’t already been factored into the agency’s long-term credit analysis of the company’s credit.” Then again, this could be modest; and advocates could argue the benefits of $1 trillion returning to the US far outweighs some of these impacts, particularly considering that most of those companies with lots of cash overseas—Apple, Oracle, Cisco, et al.—aren’t exactly unhealthy. But food for thought.
 
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.
0
Blog entry
By jneu, March 06, 2017
The Latin American Treasury Managers’ Peer Group meets next month to bridge the risk and opportunity in the region for MNC businesses.
 
MNCs are facing a predicament in global markets as they seek to understand the impact of US policy change under President Trump and the international, regional and local responses to it. US MNCs in particular likely face additional policy backlash in Latin America, from Mexico southward. Accordingly, this is an opportune time to discuss with peers the way forward for treasury activities supporting MNC business in the region, including plans to bridge all types of border controls.
 
Meanwhile, keeping on top of funding, working capital and liquidity improvement opportunities may be critical as cross-border flows of funds could become disrupted and certainly at risk with rising volatility in foreign exchange rates. As usual, the impact on regional suppliers could be worse, increasing the value of adapting global supply chain finance platforms to the region.
 
Finally, as all these challenges come at a critical juncture of change for banks operating in the region, driven largely by post-financial crisis global bank regulation, the group will also evaluate bank relationships and evaluation metrics, comparing global, regional and local players active in Latin America today. In other words, which banks will be there for them when they need vital services or solutions?
 
For more than two decades, The NeuGroup has been a trusted thought leader and respected advocate for global finance and treasury professionals. The NeuGroup leads the way in peer knowledge exchange through its flagship publication, iTreasurer, and The NeuGroup Network, which includes 18 invitation-only groups serving more than 400 treasury and finance professionals across functions, industries and global regions. Visit NeuGroup.com for more information.  
 
0
Blog entry
By afriberg, March 03, 2017
The FX Managers’ Peer Group 2 (FXMPG2) tackles FX execution in volatile times in meeting March 23-24 in New York City, hosted and sponsored by Thomson Reuters. 
 
It’s not unlikely that we are looking at a year of increased FX volatility: new president, a new outlook on trade relationships and several big events on the European political calendar. One NeuGroup sponsor also predicts an increase in intra-day FX volatility. This puts the onus on FX managers to focus on improving FX trading and execution practices, which was a highly rated topic for the FXMPG2. The sponsor and a member will present jointly on best practices in FX execution, including what the member is doing in algorithmic trading. 
 
Members of the FXMPG2 (like those in the sister group the FXMPG) are also observing the new US president and his administration to understand the new political and economic environment and its impact on markets. Following up on key projects from 2016, members will compare their bank score cards and how they communicate with their banks about service levels and key aspects of their bank relationships.  
 
Also on the agenda:
 
New hedge accounting exposure draft: In September, 2016, the FASB released an exposure draft on hedge accounting with the aim of making “targeted improvements to the hedge accounting model based on the feedback received from preparers, auditors, users and other stakeholders.” Key goals are to make hedge accounting easier to achieve and account for, and reduce the risk of restatement. 
 
The Options vs. Forwards Decision: A perpetually high-rated topic for many, this session will examine the decision parameters and influencing factors for members when determining which instrument best serves the hedge objective, generally or at any given time. A member recently went through an exercise to review instrument mix in the hedge program, and he will share some of the analysis and conclusions.
 
Lunch with Table Topics: Each table will have a topic to discuss, for example: setting FX objectives and defining success; quantifying and mitigating tail risk; exposure forecasting tools and processes; and trouble currencies update. 
 
For more than two decades, The NeuGroup has been a trusted thought leader and respected advocate for global finance and treasury professionals. The NeuGroup leads the way in peer knowledge exchange through its flagship publication, iTreasurer, and The NeuGroup Network, which includes 18 invitation-only groups serving more than 400 treasury and finance professionals across functions, industries and global regions. Visit NeuGroup.com for more information.
 
0
Blog entry
By aorwick, March 02, 2017
This year, look for movements in the foreign exchange markets to be a reflection of more than interest rate differentials, trade flows and other fundamentals. 
 
FX volatility has nearly doubled since the US Federal Reserve concluded the last round of asset purchases under QE3 in 2014, and it may continue its upward trajectory. The new US administration has not fully settled in yet, and there are several significant events on the European political calendar in 2017. Will traditional forward-based hedge programs continue to meet objectives, or will other strategies result in better performance?
 
Anne Friberg, facilitator of the NeuGroup’s FX Managers’ Peer Groups 1 and 2, will return to the EuroFinance Conference on Managing Rapid International Growth to moderate a panel on how politics drive FX. 
 
Sign up here to receive a report on the key takeaways from Ms. Friberg’s panel discussion.
 
The panel will discuss how corporate treasurers think about FX risk and the objectives of the hedge program, especially in light of several large FX shocks in recent years. Plus, panelists from Hedge Trackers and FiREapps will share their input on the complexities of exposure forecasting and hedge accounting, and how they affect the choices put before treasurers. 
 
How should corporate FX risk managers respond to volatility? Can technology and processes combine to give you a holistic view? Look for the panel to offer insight into the nature of today’s FX risks and the strategies on offer. 
 
Ms. Friberg’s panel, entitled “Focus on FX: The Problem of Politics”, will take place at 2:40 p.m. on Thursday, March 2, at The InterContinental in San Francisco, California. 
 
0
Blog entry
By aorwick, February 28, 2017
Anne Friberg, NeuGroup Senior Director, will return to the EuroFinance conference on Managing Rapid International Growth to share her thoughts on the nature of today’s FX risks on Thursday, March 2, in San Francisco, California. 
 
In a session entitled “Focus on FX: The Problem of Politics”, Ms. Friberg and three panelists will look at how politics continue to be a key driver of FX rates in many countries. In fact, some moves in the FX markets today have more to do with the state than interest rate differentials or trade flows. 
 
No matter the cause, treasurers have seen a recent increase in FX volatility. With this in mind, the panelists will discuss whether treasurers should keep their forward-based programs in place or consider more exotic products, such as basket options. 
 
The panel will also address the question, “Can a combination of technology and processes give you a holistic view?” EuroFinance Day 2 is focused on how treasurers are using technology to drive international growth. 
 
Joining Ms. Friberg on the panel will be industry experts from FiREapps, Hedge Trackers and Logitech. 
 
If you are interested in receiving our key takeaways on foreign exchange management, including the issues raised on Anne's panel, click here
 
For more information about EuroFinance San Francisco, visit http://www.eurofinance.com/conferences/managing-rapid-international-growth
 
0
Blog entry
By jneu, February 27, 2017
Treasurers own more activities at a time when action plans may be needed like never before.
 
When the Treasurers’ Group of Mega-Caps meets next month in New York, they will check in on the changing scope of their roles and responsibilities. It’s an important time to do this because the growing role for treasurers managing activities outside the traditional treasury space. More are wearing multiple job-title hats, makes the coming roller-coaster ride from changing policy consequences all that more challenging. 
 
The shape and implications of the Trump Administration’s tax reform policy agenda, and especially regarding off-shore cash repatriation, will be top of mind. But so will the risks (and opportunities) created as a consequence of President Trump’s wide-reaching economic policy agenda—and the potential backlash from US economic and trade partners. 
 
Thus, the most interesting aspect of the upcoming meeting may be the risk workshops planned to look at scenarios for the dollar, supply chain and related trade finance, commodity prices and the knock-on effects for major developed and developing market economies (and their currencies). For mega-cap multinationals with global footprints, the coming few years may be a roller coaster ride for the ages. Scope creep in tMega members’ roles and responsibilities will only make the ride more thrilling.   
 
For more than two decades, The NeuGroup has been a trusted thought leader and respected advocate for global finance and treasury professionals. The NeuGroup leads the way in peer knowledge exchange through its flagship publication, iTreasurer, and The NeuGroup Network, which includes 18 invitation-only groups serving more than 400 treasury and finance professionals across functions, industries and global regions. Visit NeuGroup.com for more information.
 
0
Blog entry
By aorwick, February 24, 2017
Join Ted Howard, Managing Editor of iTreasurer, as he sits down with Maex Ament, Chief Strategy Officer and Cofounder of Taulia, to discuss the recent Spotlight Feature on how fintechs are changing the way buyers and suppliers approach their supply chain.  
 
Fintechs Transforming Supply Chain Finance
Featuring Ted Howard of iTreasurer and Maex Ament of Taulia
March 9 PST/12 EST
Click here to register
 
Fintechs are leveraging technology to streamline the buyer-supplier experience, eliminating age-old tensions and adding a powerful tool to working capital management. With help from these new players, buyers are maximizing their supply chain returns, and suppliers are strengthening their cash positions. 
 
Yet, NeuGroup survey data indicates that many MNCs do not have supply chain finance programs in place. Most companies still cling to old trade finance processes, which actually have the potential to weaken their supply chains. 
 
During this interactive webinar, Mr. Howard and Mr. Ament will address your questions and concerns about how fintechs use technology and data analytics to better manage working capital. 
 
Register now to participate in a live Q&A with industry experts as they explore the ways fintechs can help you save money and eliminate inefficiencies.  
 
0
Blog entry
By afriberg, February 13, 2017
 
First NeuGroup meeting of the year: New president, FX volatility, setting hedge objectives and reacting to rising interest rates.

The sponsor of the first NeuGroup meeting of 2017, Société Générale, is predicting higher FX volatility this year, including higher intra-day volatility. This heightens the importance of improving FX trading and execution practices, which was a highly rated topic for members of the FX Managers’ Peer Group (FXMPG), who convene in New York on March 7-8.

With a new US president and administration in place, companies are attempting to understand the new political and economic environment and its impact on markets. In the case of rising interest rates, what should treasury do to make sure the hedge program continues to meet its objectives? And is this the right time to consider net investment hedging? Société Générale’s experts will weigh in. 

Continuing discussion of challenges faced in 2016, the group will compare approaches for determining the principal objectives for the hedge program and their internal hierarchy. 

Also on the agenda:

• New Hedge Accounting Exposure Draft: In September, 2016, the FASB released an exposure draft on hedge accounting with the aim of making “targeted improvements to the hedge accounting model based on the feedback received from preparers, auditors, users and other stakeholders.” Key goals are to make hedge accounting easier to achieve and account for, and reduce the risk of restatement. An expert from Bloomberg will share his analysis of the exposure draft and recent developments.

• The Options vs. Forwards Decision: A perpetually high-rated topic for many, this session will examine the decision parameters and influencing factors for members when determining which instrument best serves the hedge objective, generally or at any given time.

• Lunch with Table Topics: Each table will have a topic, selected from items on the topic poll that did not rate high enough for members to make the agenda with a session of their own but that were still ranked highly by several members. For example: counterparty exposure management; quantifying and mitigating tail risk; effective FX training; bank scorecarding.

For more than two decades, The NeuGroup has been a trusted thought leader and respected advocate for global finance and treasury professionals. The NeuGroup leads the way in peer knowledge exchange through its flagship publication, iTreasurer, and The NeuGroup Network, which includes 18 invitation-only groups serving more than 400 treasury and finance professionals across functions, industries and global regions. Visit NeuGroup.com for more information.

 
0
Blog entry
By brichardson, February 09, 2017
January 2017 was the start of a four-year adventure that is sure to touch many aspects of corporate America. The Treasurers’ Group of Thirty (T30) will gather March 15 in New York at the offices of Nasdaq MarketSite to discuss the impact of the new Trump administration on their businesses and the economy.
 
At the top of the T30’s wish list is tax reform, and the stars appear to have aligned so that a badly needed overhaul of tax law can take place. Reduced rates, deductions to encourage capital spending and relief from punitive tax rates on foreign income that prohibits repatriation of cash are all key hopes of American companies. As for America as a whole, funneling the majority of an estimated $2 trillion in cash into the US economy is sure to give it a boost. Kathleen Dale of KPMG, who did a great job giving an update on Section 385 last fall, will lead a session on the significant impact tax reform could have in this country. 
 
Speaking of the economy, there are so many new variables in the overall equation that it can be difficult to make sense of it all. Regulatory overhaul in the areas of banking, pipelines and health care; renegotiated trade agreements; new views on monetary policy; and additional spending on defense and infrastructure will be a boon to some industries and pose risks to others. The group will have a session on these topics to get some clarity on direction and impact.
 
Cash-flow forecasting is also a nemesis for some companies. But News Corp has developed a model for a direct forecast that works well for them. The News Corp treasurer will review the company’s process and tools used for generation in the hopes that other members will find some nuggets of information that will aid them in their own forecasting activities.
 
For more than two decades, The NeuGroup has been a trusted thought leader and respected advocate for global finance and treasury professionals. The NeuGroup leads the way in peer knowledge exchange through its flagship publication, iTreasurer, and The NeuGroup Network, which includes 18 invitation-only groups serving more than 400 treasury and finance professionals across functions, industries and global regions. Visit NeuGroup.com for more information.
 
 
 
0
Blog entry
By thoward, February 06, 2017
In the February issue of iTreasurer we discuss developments (or arguably, retreats) in China, interest rates, M&A for 2017 and a little more Trump.
 
On page 1, contributing editor Bryan Richardson, who also leads the NeuGroup’s Asia treasury groups, discusses some of the challenges facing treasury practitioners in China. Over the last several years Chinese regulators have been easing back on strict rules on cash management. But lately, in its attempt to better control the economy, it’s been backtracking on some of the easing. “Uncertainty and erratic regulatory behavior in China is not new,” Mr. Richardson writes. “But advancing the country in such a meaningful and inviting way only to begin reversing course a few years later is a business-confidence killer. Add to these actions the even more aggressive posturing of China’s military in the South China Sea,” and the climate can suddenly get very chilly.
 
On page 6, iTreasurer takes a quick look at the forecast for prime funds. It doesn’t look great. Despite some pick up in prime inflows at the end of 2016 and into the new year, overall, the outlook looks pretty flat. There’d been some hope that the yield differentials, which favor prime funds, would induce money back into the assets. However, “investors that took a wait-and-see approach, moving into government funds temporarily with the expectation of moving back to prime funds in 2017, will likely be disappointed.” That’s because prime fund sizes are a fraction of the market value and most investment policy statements require the investment not to exceed a certain percentage of the total market value of the fund.
 
The featured meeting summary for February is the second-half meeting of the NeuGroup’s Global Cash and Banking Group. Members discussed solutions for managing cash amid historically low rates and the constant threat of regs that over the past several years have reshaped cash management and prompted attendees of the meeting to explore new solutions.
 
On page 11, contributor John Hintze discusses a Morningstar report on the market possibly getting ahead of itself amid great hopes for what impact the Trump administration will have on the economy via tax policy and regulatory relief. “The US stock market has jumped in anticipation of President Donald Trump’s promises of deregulation and lower taxes,” writes Mr. Hintze. “But Morningstar anticipates corporates’ humdrum growth prospects continuing, along with a less attractive environment for raising capital.”
 
Continuing the theme from page 1, iTreasurer discusses China’s attempts to curtail outflows and certain cash management tools. The unofficial restrictions China has placed on multinational corporations last year, which sent capital out of the country via pooling structures, just got more restrictive.
 
On page 14, NeuGroup founder Joseph Neu discusses ZIRP (zero interest rate policy), PIRP (positive interest rate policy) and the possible end of NIRP (negative interest rate policy). That is with Trump occupying the White House and the Fed hiking rates, Europe and Japan will have to give up on ZIRP.
 
Finally on page 15, iTreasurer delves into the M&A market: the upshot is that it will remain tight into 2017 after finishing strong in 2016.
 
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.
0