What’s on International Treasurer’s radar screen.
A number of topics came up in this week’s editorial discussion, ranging from utilizing export credit agencies (ECA) to ever-friendlier activity in syndicated loan markets to treasury hiring.
ECAs
Export Credit Agencies (ECAs) have been around for a long time, but they are not as well utilized by the treasury community as they could be. Amid chaotic market environments like the current period, ECAs can be a significant source of liquidity for large projects or export sales. ECAs can also act as a catalyst to get banks engaged in a deal by “improving the sweet & sour ratio,” according to one banker who works closely with ECAs. Also, non-US agencies have been getting more lenient about local content rules, so there are more and more opportunities to explore internationally.
Bank loan market
Banks are looking to put capital to work with credit appetite becoming more robust for deals in IG and BB territory. Bankers say oversubscription is common, which is a good indication of upcoming pricing trends. Longer tenors are also increasingly available with 4-year deals becoming more commonplace and 5-year deals are expected to gain traction in the US in the fourth quarter—though still likely at a price relative to 3-4-year tenors. While the trend is still toward mutual rewards for strategic bank partners, including corporates granting more than one of their best bank’s bookrunner or joint-lead status, there are also reports of banks, looking for sector or geographic exposure and with excess capacity, just signing on to loan syndicates or facilities with few expectations attached. This contradicts reports elsewhere of on-going, hard-nosed discussions over wallet share to get a bank to bring its balance sheet. This suggests that there are “haves” in the market enjoying good times when it comes to bank financing and “have nots” that are still feeling the pinch from the credit crisis (see recent item on Europe).
Treasury hiring
A recent survey of The NeuGroup’s bank treasurers showed a significant minority had added headcount recently, and none had lost heads. Hopefully this will be a leading indicator for treasuries more broadly. Banks are on the forefront of new regulatory compliance demands, including risk governance and oversight trends and this may account for some staff build up to support ALCO and further expansion of Board-level risk committees. On the non-bank corporate front, we continue to see substantial migration of treasury staff from company to company. This is at least partly explained by treasury professionals having put in extraordinary efforts through the crisis and its aftermath and finding their best avenues for further advancement outside the companies they helped bring through. It remains to be seen whether treasuries will be net ahead when the music stops on the current round of musical chairs, or whether doing more with less starts afresh from a lower basis.