A roundup of issues International Treasurer is investigating.
The money fund woes of 2008 might have captured the headlines and kept pension managers up nights, but troubles in the securities lending market caused more losses. A recent conference on the topic highlighted several trends that have emerged in response to securities lending problems during the financial crisis as market participants attempt to find ways to avoid such losses in the future.
As with most things in finance, top among the priorities for securities lending is more transparency. This, and a view of the activity as an investment, rather than operational, issue, is key to avoiding losses, speakers at the conference noted. In particular, a full understanding of reinvestment policies and a better grasp of counterparty risk is needed to avoid problems.
Going from the micro to the macro, export credit is on the minds of many treasurers these days. In particular, many of the G-7 ECAs ramped up their offerings—both in loan guarantees and direct lending—as well as expanded their palettes of offerings as part of stimulus and other measures during the financial crisis. Many of these programs are still in effect and treasurers can use them to jump-start or supplement commercial credit arrangements to seal large export transactions.