3 min readExecutive Summary Institutional cash investors continue to face uncertainties and difficult choices in ultimately obtaining liquidity despite the latest liquidity announcements. Interests of institutional investors have taken a back seat in these settlements. The distinction between retail and institutional investors seems arbitrary and illogical. To avoid their own reputational risk, we think that the secondary…
1 min readIn light of the difficult credit market of late and the recent emergence of a small yet hopeful glow at the end of the tunnel, this month we wanted to cover a topic that can help with a question that may be on the mind of many corporate treasurers: How do we get back on…
2 min readThe Aftermath of a Crisis The credit market crunch that started in August 2007 has had a widespread impact on the treasury community’s liquidity management practices. Unlike in any previous market downturns, this credit market crisis started with a popular cash investment vehicle, asset-backed commercial paper, and continued with a system-wide shutdown of another, auction…
1 min readNow for some good news…. Indicators of a recovering credit and liquidity environment have emerged significantly over the last month. The TED spread (3-Moth LIBOR vs. Treasuries) continued to narrow to 79 basis points, while a continued sell-off in treasuries contributed to a stronger upward bias in the Fed Funds futures contract. These indications, along…
2 min readNow into our 18th year of working with treasury managers across the country, it’s as clear as ever that managing risk remains one of the least understood and most challenging areas of corporate cash management. The treasury landscape is littered with painful examples of write-downs from highly rated securities whose risk was miscalculated, misunderstood, or…
3 min readExecutive Summary Prior to the recent credit crisis, strong criticism of money market funds taking on too much risk could easily have been dismissed as fear mongering. With strong (but now dubious) triple-A credit ratings, constant $1 per share prices, daily liquidity, strong brand recognition, and deep-pocketed parents, what was not to like about money…
2 min readI tend to liken the liquidity crisis to a hurricane that has hit the financial industry. Bear Stearns was swept away during the worst of the storm and now, as the weather subsides a bit, some treasurers are beginning to emerge from their shelters to assess the damage; what held fast and what may never…
2 min readAside from our own clients, in 17 years of helping guide Treasurers through the cash investment markets, I have never seen the corporate landscape littered with more casualties than today. Of all of the companies holding auction rate securities (ARS) today, an estimated 70% are experiencing regular auction failures and severe liquidity issues. In some…
3 min readExecutive Summary From administering aggressive interest rate cuts to providing longer-term liquidity to financial firms; from accepting non-traditional asset collateral to assisting the Bear Stearns takeover by JPMorgan Chase; this Federal Reserve is unlike any we have seen in recent history. By throwing out the rulebook of central banking, some pundits say the Fed sets…
2 min readFor cash investors, there exists a delicate and sometimes frustrating balance between deciding to stretch for those additional 10 basis points in yield and the urge to recoil to treasuries when isolated liquidity issues arise. To make wholesale judgments of any asset class or investment sector can result in unfounded generalizations that are rarely based…