What’s on International Treasurer’s radar screen.
Several topics came to the fore during International Treasurer’s weekly editorial meeting, including a continued look at electronic bank account management (eBAM), corporate investment managers looking into riskier asset classes, as well as the possible impacts of the Federal Reserve’s next round of quantitative easing.
eBAM
EBAM continues to gain in popularity as treasurers look to overcome a labor-intensive function – mostly manual management of bank accounts – that both bankers and treasurers loathe. Over the past year several companies, including IT2, Wall Street Systems and more recently SunGard, have jumped into the market. International Treasurer will look at how this segment of treasury automation is growing and where it’s headed.
Riskier investments/QE2
In the pre-meeting survey of The NeuGroup’s Treasury Investment Managers’ Peer Group, 59 percent of respondents said they were getting pressure from management to squeeze more returns out of the company’s portfolio. And according to views heard at the group’s meeting, many investment managers were attempting this by going into riskier assets – i.e., the bank loan market, which consists of investment grade and high-yield bank loans, otherwise known as leveraged loans.
What will surely exacerbate this situation is the Fed’s recent announcement that it will buy $600bn in US government bonds over the next eight months in an attempt to drive down interest rates and encourage growth, i.e., quantitative easing or QE2.
The expectation is that these moves will encourage households to spend more and businesses to invest more, as a result of cheaper borrowing and higher stock prices. A weak dollar is also expected to help boost exports. While this will be good for borrowers and exporters, it will keep the heat on investment managers to boost returns. As everyone knows, companies are sitting on lots of cash; some have been buying back stock while others have been acquisitive. But these strategies aren’t for all companies. So the search for yield will continue in earnest.