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emica publishes Guide for Corporate Treasurers to the New World of Trade Receivables Securitisation PDF Print E-mail
Tuesday, 15 December 2015

Against the backdrop of fundamental changes in the regulatory environment, research from Demica has shown that trade receivable securitisations (TRS) remain a viable, important and popular tool in the corporate treasury toolbox. With non-bank financiers entering the field (such as hedge funds and private equity houses) corporate treasurers can continue to benefit from important working capital advantages. However, they need to sharpen their awareness of issues, opportunities and potential pitfalls in order to successfully navigate this changing landscape.

In his latest whitepaper, Tim Davies of Demica, a twenty year veteran in the field, offers key points of advice for corporate treasurers approaching the new world of TRS. The guide covers four important areas to be assessed by anyone contemplating a securitisation, taking into account the new players in the market:

· Evaluating the appropriateness of the receivables pool - The new generation of securitisation arrangers brings flexibility to the market, being able to tap into smaller portfolios and offering structural alternatives to funding riskier components within the pool.

· Ensuring data quality - Arrangers are able to assist in the generation of consistent and compliant data sets to underpin the securitisation.

· Determining the fee structure - Not necessarily bound by regulatory capital hurdles, the new investors in the market can offer flexibility on pricing when and where required.

· Assessing pricing offers - Bundling of services into organic offerings and the availability of a wider range of pricing data allow for increased transparency about pricing.

Tim Davies says, “Never before have treasurers had so much choice beyond their traditional banking relationships.” He continues, “New entrants to the receivables finance market are reshaping how treasurers think about their working capital needs. It is important for any organisation considering a securitisation to assess what it should be asking of its arranger and importantly, of itself.”

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