Credit & Risk

Credit Insight: The Backbone of Counterparty Risk Management

Credit Insight: The Backbone of Counterparty Risk Management

Credit & Risk

2 min readAbstract An effective counterparty strategy must provide clarity on counterparties’ credit strength, individually and collectively, and have a desired “benchmark” level. Changing credit landscapes, aggregation challenges and inconsistent and irregular policy practices are just some of the challenges facing treasurers transitioning from a reactive counterparty risk management practice to a proactive benchmarked approach. The difficulty…

Will Housing Finance Reform Impact Cash Portfolios?

Credit & Risk

1 min readRegulatory reform has been a constant presence in the world of cash investments over the past five years, and it’s had a significant impact on credit risk, supply and return. As the dust from the credit crisis began to settle, most short-term investments including bank deposits, money funds and commercial paper were, by necessity, wrapped…

Housing Finance Reform and Agency Supply Shortage

Housing Finance Reform and Agency Supply Shortage

Credit & Risk

2 min readAbstract The Johnson-Crapo bill represents another concrete step towards the resolution of the future of Fannie Mae and Freddie Mac and one that will further reduce the supply of government agency debt. This presents a serious challenge to the management of cash portfolios due to the core holdings status of agency debt. Money market fund…

Make Whole Calls: What You Don’t Know CAN Hurt You

Credit & Risk

2 min readSubtle language changes to the Fed’s official statement and comments from Janet Yellen’s first press conference as Chair shifted the anticipated timing of a Fed funds rate hike to the first half of 2015. The dot chart that maps FOMC members’ interest rate predictions showed that the majority expect the first rate hike to come…

Make Whole Calls

Make Whole Calls

Credit & Risk

2 min readAbstract Make whole calls caused little investor concern until the low yield environment resulted in unexpected losses. Make whole provisions fail to protect short-term investors when bond spreads fall below make whole levels. Yield volatility in Treasury securities complicates matters and increases risk for cash investors. Make whole bonds are generally not considered callable, and…

Separately Managed Accounts in Counterparty Risk Management

Separately Managed Accounts in Counterparty Risk Management

Credit & Risk

2 min readAbstract Counterparty risk management should have an integrated framework. While utilizing a separately managed account may help reduce a corporation’s concentration risk in a money market fund, it also may be an important tool to reduce enterprise level counterparty risk. A portfolio of securities not correlated with the firm’s largest credit exposures may help diversify…

Managing Counterparty Risk

Credit & Risk

1 min readThis past month we wrapped up our third webinar on counterparty risk management, finishing the three part series we began last October. Our goal of the webinar series, hosted by ourselves and Strategic Treasurer, was to raise awareness of the challenges treasurers face in managing counterparty risk and, as a thought leader in the industry,…

Nine Elements of Credit Approval for Cash Portfolios

Nine Elements of Credit Approval for Cash Portfolios

Credit & Risk

2 min readAbstract In this research commentary, we offer a behind the scenes look at the credit approval process for cash investment portfolios. We discuss nine essential components to help clarify a process that can sometimes seem mysterious and intimidating. Beyond Ratings – What Makes Cash Unique The Credit Universe – It’s All About Supply Preliminary Screening…

How Do Treasurers Authorize Credit Exposures?

Credit & Risk

1 min readTransparency is the new buzz for corporate treasury professionals in their constant pursuit to understand and track underlying risk. Like the shifting channels of the Mississippi River, credit exposures in investments and counterparties present continuously variable hazards to navigation. The credit crisis intensified treasurers’ efforts to understand their exposures, but too often formal reports were…

How Do Treasurers Authorize Credit Exposures?

Credit & Risk

1 min readTransparency is the new buzz for corporate treasury professionals in their constant pursuit to understand and track underlying risk. Like the shifting channels of the Mississippi River, credit exposures in investments and counterparties present continuously variable hazards to navigation. The credit crisis intensified treasurers’ efforts to understand their exposures, but too often formal reports were…