Many treasurers are investing cash in their businesses rather than stockpiling it.
Most global treasurers are now cautiously bullish on the prospects for 2010. But a nearly equal percentage fear there’s more bad news to come. Despite that mixed outlook, EuroFinance’s quarterly Business Confidence Survey of treasurers found that a majority are reinvesting spare cash to grow their businesses, rather than stockpiling it or using it to deleverage.
Specifically, 44 percent of respondents say that they will reinvest cash, while 25 percent said they’ll pay off debt and only 13 percent are boosting their cash reserves. This is a hopeful sign in light of EuroFinance’s finding that 35 percent of their poll respondents said spare cash is increasing, as opposed to 23 percent who said it is still declining—the rest say it is stable.
In terms of biggest worries, the state of the economy is now at the top of the list. That might not seem encouraging, except that it displaces treasurers’ earlier, more alarming top worry that a counterparty or bank might go toes up.
Meanwhile, the poll reinforces the view that borrowing conditions are improving. Twenty-nine percent of the respondents feel that credit markets improved in the fourth quarter (the poll was conducted from mid-December to early January), while 19 percent said conditions have deteriorated. Also, 54 percent say banks are delivering reasonable lending terms to healthy companies, although some 68 percent believe that banks used the crisis to unfairly increase pricing.
If banks have jacked spreads unduly wide, treasurers in the US could be the first to suffer as benchmarks rise, according to the survey. Thirty-eight percent of the respondents think the Federal Reserve will raise rates this year; treasurers see the eurozone and UK central banks much less likely to do so in 2010.