By Ted Howard
This month we continue our series of Peer Group Leader Views, where NeuGroup Peer Group leaders offer some of the overarching themes they’ve seen over the course of facilitating dozens of meetings over the years.
Last month, Anne Friberg explained how technology is helping treasurers be more strategic. In this month’s installment, contributing editor and peer group leader Bryan Richardson discusses the path to the treasurers’ role, using a football analogy and describing the risks and benefits of both. One way to go is the “Heisman Trophy” approach to the treasurer’s job, driving up the middle, arm outstretched and stiff as you pound away at the defensive line and slowly eat up yardage. In this mode, you stay in your current position and become the best you can be. Alternatively, you can do the end around, which means going out into the business and learning its ins and outs. As usual with most treasury recommendations, it really depends on the attitude of company and specifically, the department. Some like the pluggers who become the treasury experts, some don’t. And some companies want treasurers to know all about the business.
Also in this issue, we discuss in “Asia Debt Marts to Overtake US, Europe” how the renminbi isn’t the only asset trending from the East. Asia-Pacific debt markets will also grow dramatically in the next several years, which will bring risks but of course, lots of rewards. According to S&P Capital IQ, global corporate demand for debt and refinancings could run in the $60 trillion range over the next four years and Asia could be the area that supplies much of that debt.
Still, it is the RMB that is the darling of global finance lately. In “To RMB or Not to RMB,” Joseph Neu surmises that with China’s economy slowly inching toward becoming the world’s largest, perhaps now is it time for investors to invest some cash there. In other words, the term “trapped cash” and China may have finally become delinked. Indeed, take the word “China” out of the investment and people would be scrambling to get into it. It’s a market that’s AA-rated, has the world’s second-largest GDP, has accounted for about half of global GDP growth, represents the third-largest global bond market (and growing), and represents the world’s-largest trading nation with the second most used currency in global trade finance. What’s not to like?
In “Trade Receivables ABS Gains as Funding Tool,” John Hintze takes a look at a growing market that is helping companies in dozens of industries facilitate their global transactions by monetizing their receivables. The story describes how truck maker International Trucks has been utilizing asset-backed securities for decades. The market dried up a bit after 2008 but has been slowly creeping back. And it’s not seen as some exotic or complicated transaction but as a necessary tool in managing a company’s working capital.
Finally, in our series of “lookbacks,” iTreasurer enters the way-back machine to June 1994 when the then named International Treasurer discussed hedging balance-sheet translation. “Deciding whether or not to hedge balance sheet translation exposure involves an analysis of the nature of the business and the level of earnings repatriated to the parent,” IT wrote in “Is it Real…or is it Paper?” in that June’s issue. Unfortunately not a lot has changed in this regard as many of the challenges treasurers faced then still linger today.