By Alex Lhéritier – European Head of Coverage at Redbridge. I worked as a banker for close to 20 years and I thought for quite some time there was not much to unveil about banking practices. Yet, I changed my mind this year, after moving into consulting and seeing the banking industry through a different lens.
Ahead of the release of a new technical paper on the optimisation of working capital, Redbridge has conducted a survey to assess whether the COVID-19 crisis has changed the dynamics of working capital within European companies. Between mid-February and mid-March 2021, 35 finance managers from major groups responded to a six-question survey, the results of which we present below.
In January, French Treasury and the French banks agreed to offer companies that raised a PGE (prêt garanti par l’Etat — French State Guaranteed Loan) an additional one-year deferred amortization. Muriel Nahmias, Senior Director Debt Advisory at Redbridge, provides an update on this grace period and the options for extending PGEs.
On 4 March, Redbridge chatted to Arnaud Winkelmann, Director of Finance and Treasury at Compagnie des Alpes, about financing and cash management in times of crisis. On the agenda were financing strategy, state-backed loans, waivers, savings, electronic payments and cash management.
Simon Berta details the different impacts of the LIBOR’s replacement in credit facilities, whether they are existing credit facilities with maturities spanning over 2021 and beyond, or new facilities to be implemented this year.
As we bid farewell to what was a year like no other, we look back at some of our articles from last year that provided our innovative points of view on matters related to finance and treasury.
If you use the NEU CP market, you can stop drawing on your bank lines, keep them as backstop lines, and issue commercial paper at a zero or even a negative rate and at very low cost in terms of legal documentation, writes Muriel Nahmias, senior director at Redbridge.
Biggest companies using deconsolidation transactions under established and recurring factoring programs or end-of-year or half-year “spot” transactions earn an average of at least 0.3x leverage, according to our experts Hugo Thomas and Olivier Talvard.
Redbridge’s annual study of corporate debt structure reveals that the credit profile of France’s leading listed companies has moved from “A” to “BBB” over the past 18 months. Tensions in negotiations with banks and private bond holders are prompting finance departments to prepare for a more stressful environment.
The recent much publicised cases of fraud and losses in various trading companies in Asia and MENA (e.g. Hin Leong, Agritrade, Phoenix, Hontop Energy and Zenrock) have left a deep mark on the industry. The “usual suspect” group of financing banks (e.g. HSBC, ABN AMRO, Société Générale, Natixis, CACIB, BNP Paribas, ING, MUFG etc.) was seriously impacted with potential losses in some banks going well over USD 100 million. As a direct consequence some leading banks have decided to completely discontinue the coverage of this sector, others have discontinued their activities in certain geographical regions and let their respective teams go. Furthermore, new business has been frozen and thorough reviews are currently being prepared by other leading sector lenders.
According to Olivier Talvard, senior director at Redbridge, improving working capital requires careful execution to achieve its goals while simultaneously protecting the client-supplier ecosystem.
Redbridge’s latest survey of 104 European companies reveals the first lessons of the crisis and the current priorities for treasurers: forecasts, working capital and cash pooling. Any planned savings will need to be mindful of preserving bank relationships.
Florence Saliba, Chairwoman of the French Treasurer Association (AFTE) and François Gouesnard, Vice-Chairman of the Finance Commission, provide a positive assessment on the FNB’s action aimed at restoring confidence in the NEU CP market – Interview
