One member cut his company’s tax bill by beating the clock to complete a debt refinancing. As one NeuGroup member’s fiscal year began to draw to a close, he saw an opportunity to save his company millions of dollars in taxes by completing a debt refinancing deal—but he had to race the clock get it done before the calendar changed. Because of the pandemic’s impact, the company needed to save money, so it was critical that the debt deal go…
February 4, 2021
Questions About Answers: Moody’s Cybersurvey Raises a Few Concerns
NeuGroup members want to know how the credit rating agency will use survey responses about cyber risk.High-profile corporate cyberattacks have many companies reevaluating how they mitigate cyber risk. And over the past few months, some NeuGroup members have received a lengthy survey from Moody’s asking questions about their companies’ approaches to cybersecurity. The survey, which Moody’s says has about 60 questions, has raised questions—and a few concerns—about what Moody’s will do with the answers.Below is some of what members said…
February 2, 2021
Under the Hood: How Banks Price FX Swaps With Corporates
Wells Fargo explains credit and capital charges for corporate counterparties on derivative transactions.Corporates that are using or considering using long-dated hedges such as five-year FX forwards or swaps can benefit from understanding the way banks price derivatives using a combination of credit and capital charges. That idea surfaced during a recent meeting sponsored by Wells Fargo for NeuGroup members who manage foreign exchange risk. Credit and capital costs can impact unwinds and restructurings as well as new transactions, Wells Fargo…
January 28, 2021
Documentation Overload: Internal Controls Over Financial Reporting
A survey of financial executives includes complaints of excessive documentation required by external auditors.Finance executives at large US companies are finding it increasingly difficult to document internal controls over financial reporting (ICFR) to the satisfaction of their internal and external auditors, according to a study recently published by the Financial Executives International’s research arm. Several of the most difficult controls to design, implement and operate are common in corporate treasury. Pain points. Controls around non-routine transactions—bond issuances, significant one-off payments…
January 26, 2021
Pension Endgames: Insights for Managers Mulling Moves
A session sponsored by Insight Investment probes pros, cons and timing of transferring liabilities to insurers.A key consideration for corporates with traditional defined benefit plans is whether to transfer pension liabilities to insurance companies as funding deficits narrow or plans go into surplus. The primary benefits of risk transfer are eliminating PBGC fees, which have escalated substantially in the last few years, and removing all risk from the company’s balance sheet—both interest rate and longevity risk. Half of the members…
January 26, 2021
Libor Transition Puzzle: FASB Provides Clarity, Relief to Corporates
Guidance from FASB clarifies accounting for all hedges impacted by the discounting transition.The Financial Accounting Standards Board (FASB) started 2021 by clarifying accounting guidance aimed at facilitating the transition of corporate floating-rate transactions away from the Libor reference rate. The standard setter is also expected to resume progress this year on issues it had set aside to address the Libor transition. Background. On Jan. 7, FASB issued ASU 2021-01, an accounting standards update that clarifies issues stemming from Topic 848, titled…
January 14, 2021
Green Hedges: What You Need to Know About ESG Derivatives
Standard Chartered explains the potential value of “use of proceeds” and performance-linked ESG derivatives.The flood of money pouring into ESG finance—everything from green bonds to sustainability-linked revolving credit facilities—has washed up on the shores of derivatives markets. At a recent NeuGroup meeting of European treasurers, sponsor Standard Chartered dove beneath the surface to reveal what value ESG derivatives may offer. The bank described two types: “Use of proceeds” ESG derivatives that hedge FX or interest rate risks arising from ESG…
January 12, 2021
Why Internal Audit Needs to Blow Its Own Horn
Like other functions, internal audit needs to publicize its value to senior executives and the broader corporation.After the completion of a lengthy process audit at a multinational company, the chief audit executive (CAE) reported results to the owner of that process. After a cursory review, the process owner, also a senior executive, asked, “What else have you done?” The CAE was somewhat taken aback. The audit took several months and ate up lots of FTE hours. But since it only…
Member question: “How do others handle remittance instruction verification for treasury payments? Callback? Third-party service? Any ML or technology? “We are reviewing our verification process for remittance instructions for payments processed through treasury. Today, we require it to be on the bene’s letterhead, or bank letter, or imbedded in the contract, but have not implemented a callback. Who does the verification in your organization? Are you looking at any third-party services or ML-type models for additional controls?” Peer answer 1:…
December 17, 2020
Laddering: FX Risk Management with Less Work, Fewer Transactions
Wells Fargo explains an alternative to layering for corporates hedging cash flow exposures. Who doesn’t want to get more for less? As in less work, more efficiency and fewer transactions, all while still meeting risk management goals. To take advantage, though, you have to be willing to look closer at the shortcomings of the very common cash flow hedging approach known as layering. During a recent interim meeting of NeuGroup’s two FX managers’ peer groups, the quantitative solutions team at Wells…