Key current treasury priorities

Treasury market update April 2009

This spring the PwC Treasury team spoke in depth with a number of Treasurers, asking their opinions about a range of issues. These findings are reinforced by insights gained through ongoing relationships with treasury professionals throughout the year. Over the next few weeks we’ll be summarising the main findings from those discussions and we’d very much like to know your thoughts.  Please use the ‘comment’ links below to add your views.  Yann

Key current treasury priorities

“Thinking early about refinancing”

“Liaising with specific territories around cash repatriation”

There are no surprises in the key priorities that currently dominate every Treasurer’s agenda. Access to cash and debt is a key concern, as is increased focus on working capital management. These are market-driven priorities, reflecting Treasurers’ ultimate responsibility for maintaining liquidity.

When it comes to liquidity and cash, organisations are taking a relatively cautious approach. Efforts are being made to arrange financing well in advance of actual need, even though additional costs are incurred. The pricing and terms of funding are important but secondary considerations when compared to access. Treasurers are also seeking insurance through increasing their funding options, including new banking relationships or bank lines. Counterparty and credit risks have been at the top of Board agendas with many companies investing time to identify all direct and indirect exposures across the organisation.

The pressure created for treasury functions in addressing these issues is, as might be expected in a downturn, rarely alleviated by additional resourcing. Thus there is a tendency to maintain an intense focus on company’s current own issues – a treasury tunnel vision – rather than looking outside to the problems and solutions in other organisations. Treasurers who might in better times interact with more peers to share insights and best practice now typically find themselves further locked within their own corporate worlds. Not necessarily a bad thing, some would argue!

So have there been any surprises from the changes to our economic climate or are Treasurers simply witnessing the descent of the cyclical curve and tightening their purse-strings accordingly?

Check back soon to find out what the responses have been. 

Comments

[Wilson Hsieh]

In Taiwan, refinancing activities are getting relatively easier than the beginning of market meltdown thanks to ease of cross-strait relationship. Yet, we didn't note narrower spread for Taiwan corporate borrowing as the global market outlook remains obscure. Alternative source of funding including introduction of potential investors through equity investments is expected to become the wave over the coming year for next refinancing activities especially under the relief of certain influential investment regulations across the strait.

[Ramki]

In the Middle East, cash rich companies are finding it hard to invest surpluses in safe instruments that yield a reasonable return. Liquidity is abundant in the market due to Central Bank actions. However, banks are still reluctant to lend money, especially in foreign currencies. This is because local banks (that know their customers) are themselves worried about a liquidity crunch in FC. Thus, we continue to see both end of the spectrum: the needy suffer, and the cash-rich also suffer because of poor yields.