Cash is king again as treasurers rethink debt strategies

Corporate treasurers are placing cash management at the centre of their strategies for 2025, as macroeconomic volatility, geopolitical disruption and persistent interest rate pressures drive caution in debt and expenditure plans. According to the latest Corporate Debt and Treasury Report from Herbert Smith Freehills and the Association of Corporate Treasurers, financial and geopolitical risks are influencing treasury activity more directly than they did in 2024. Just 24% of respondents now say these forces will have no or minor impact on their debt strategies, down from 41% a year earlier. Some firms remain optimistic, with 14% anticipate raising debt for acquisitions, up from 8% last year, but more are focused on reducing leverage, with 11% expecting to cut their borrowing.

Uncertainty sparked by the US government’s tariffs policy has been a major factor behind this shift in sentiment. One corporate treasurer remarked that there are “lots of pent-up risks” and warned to “anticipate dams breaking in 2025.” Yet others said they were pushing ahead with long-term investment programmes despite global volatility, with one respondent describing their approach as “business as usual.”

Interest rates, meanwhile, have not come down as quickly as many had hoped. For 28% of survey respondents, the cost of debt is the biggest impediment to raising new financing, outweighing concerns around economic uncertainty (23%) and tax or regulatory issues (14%). But rather than delay or cancel all spending plans, many treasurers are looking inward and optimising cash management to preserve flexibility and reduce cost. Indeed, 91% of respondents reported a sharpened focus on cash efficiency. One interviewee put it plainly: “Although interest rates are in a downward trajectory, low debt is the way forward.” This shift has prompted companies to re-evaluate internal processes, improve forecasting tools, and strengthen treasury’s influence in cross-functional planning.

Treasurers are also finding new ways to monitor market conditions and time their borrowing carefully. According to the report, many corporates are watching loan and debt markets closely, ready to act when pricing and sentiment align. A faster deal execution cycle has become the norm, allowing teams to lock in favourable terms before the next shock hits.

Technology is on the radar, but adoption is tentative. AI is viewed with cautious interest, particularly in administrative functions, but treasury teams have yet to integrate it meaningfully into core financial processes. One respondent said: “What problem or issue would [AI] solve? We can’t spare the time to research—there’s enough on our plates!” Another noted that AI is currently only trusted for “low-risk administrative tasks.” This sentiment is echoed across the report. AI may offer future promise, but for now, few treasurers see it as a priority. It is more often a background consideration than a transformation driver. Adoption, if it happens, is likely to be gradual and grounded in areas of proven value.

Taken together, the survey paints a picture of cautious but capable treasury teams, acutely aware of the challenges ahead and focused on fundamentals. With external conditions unlikely to stabilise soon, 2025 will be shaped by careful planning, strategic restraint, and a relentless focus on resilience.

 

Rise in structured asset sales will reshape corporate balance sheets

Structured asset sales between private credit investors and mostly investment-grade companies are growing in both volume and complexity, according to a report from Moody’s. The credit ratings agency says recent turbulence in public markets is likely to accelerate this trend, but warns that these deals may not always improve, and can sometimes weaken, a company’s credit quality.

Although structured asset sales often result in reduced reported balance sheet debt compared to traditional financing methods, Moody’s cautions that they can introduce other risks. These include cash leakage in the form of dividends, reduced operating flexibility, and even the potential for future debt increases. As such, the agency stresses that a reduction in reported debt does not necessarily equate to an improvement in credit strength.

The report notes that the long-term credit impact of structured asset sales remains uncertain due to limited track records. These transactions allow companies to raise capital while retaining control of the underlying assets, and the funds raised generally do not trigger default clauses in debt covenants. However, there is often ambiguity around exit strategies, particularly if asset performance deteriorates or fails to meet expectations.

When analysing these deals, Moody’s examines both the structure of the transaction and the nature of the assets involved. If the accounting treatment materially understates the risk to creditors, the agency may adjust reported financials to better reflect economic reality. This could include treating the initial investment from the private credit investor as debt or reducing the company’s earnings or cash flow to account for cash leakage.

The agency also looks at whether the company is likely to repurchase the asset in the future, or if it is taking on an outsized share of business risk. If a transaction essentially guarantees a return to the investor across a range of outcomes, Moody’s may categorise the funding as debt. Where these risk indicators are present but less pronounced, the agency may instead make partial adjustments to credit metrics.

In addition to numerical adjustments, Moody’s considers qualitative factors such as governance, asset encumbrance and broader financial policy. These may influence its overall credit view, particularly where structured asset sales suggest elevated operational or repayment risk.

 

Euro and pound rise as investors cool on US outlook

The euro and British pound are gaining ground against the US dollar, buoyed by growing investor optimism around European growth prospects and a deteriorating economic picture in the US. According to Goldman Sachs, the euro is forecast to climb from $1.13 to $1.20 over the next 12 months, while the pound is projected to rise from $1.33 to $1.39. The shift reflects a broader reassessment of the relative return and risk profile of US assets amid policy uncertainty and trade tensions.

Kamakshya Trivedi, head of Global Foreign Exchange, Interest Rates, and Emerging Markets Strategy Research at Goldman Sachs, expects this trend to continue, driven by weakening sentiment around the so-called “US exceptionalism” narrative that had previously underpinned strong equity returns and the safe-haven status of US bonds. In contrast, Europe’s investment appeal is improving. Forecasts of increased fiscal spending have lifted sentiment around European growth, helping to position the region as a more attractive destination for capital.

Government bond markets are already reflecting this change in tone. During April, both German and UK bonds outperformed US Treasuries as portfolio hedges, suggesting investors are already tilting exposures. Trivedi sees further room for realignment as global portfolios increase allocations to European and UK assets while reducing their US holdings.

 

HSBC offers duty finance lifeline for US firms facing tariff pressure

HSBC has launched a financing solution for US importers looking to ease the burden of rising import duties amid the latest round of tariffs imposed by the US government. The service, known as TradePay for Import Duties, enables businesses to access credit and settle duty payments simultaneously, helping to preserve working capital at a time when upfront commitments are becoming more onerous.

The move comes as many corporates face increased financial strain due to policy-driven trade disruption. By leveraging HSBC’s TradePay platform, US firms can streamline the import duty process through automated settlement, with HSBC either crediting payments directly via ACH or working through pre-agreed terms with customs brokers.

The offering aims to reduce friction in duty settlement while enhancing visibility and control over cash flow. As part of a broader shift away from manual processes, TradePay integrates payments and financing into a single digital workflow, eliminating the need for paper-based operations.

Originally launched in 2023, HSBC TradePay has facilitated $2.3bn in trade finance globally. The import duties extension marks a strategic adaptation for the US market in response to current economic pressures.

“Clients’ working capital needs are evolving – and we’re responding swiftly with solutions that deliver the most value to them,” said Vivek Ramachandran, Head of Global Trade Solutions at HSBC. “By settling import duties directly and frictionlessly through HSBC TradePay, our US clients have more visibility and control over their working capital at the time they need it most.”

 

C-suite eyes cuts as tariffs, inflation and demand slump loom

Half of C-suite executives are considering cost cuts within their own functions in the second quarter of 2025, as concerns mount over tariff-induced supply chain disruption, falling consumer demand, and rising inflation. That’s according to a Gartner webinar poll conducted on 17 March, which surveyed over 600 corporate executives and business leaders.

The results highlight growing unease in boardrooms. A majority (58%) of respondents expect tariffs to disrupt supply chains in the coming quarter, while 42% are preparing for a drop in demand and 41% anticipate further inflationary pressure.

In response, nearly half of leaders say they plan to reduce budgets and spending to protect financial health. Others are focused on realigning their strategies. Over one-third (38%) report they will adjust product offerings, go-to-market approaches or geographic sales mixes to better weather the storm.

While such moves signal prudence, Gartner warns against overly reactive decision-making. “CFOs and their teams must ensure that steps taken to help guide cost cuts are done in a measured way that doesn’t impact resilience and long-term performance,” said Alexander Bant, Chief of Research for the Gartner Finance practice.

To help finance leaders strike the right balance, Gartner outlines three approaches drawn from the playbooks of efficient growth companies. The first is agile resource allocation. This involves cutting in some areas to reinvest in higher-yield opportunities, such as emerging technologies or growth markets. Second is enabling faster decision-making through experimentation and a culture of continuous learning, helping teams respond to challenges as they emerge. Finally, Gartner recommends rethinking cost structures by differentiating between costs that drive competitive advantage and those that can be automated or standardised.

 

Tariff turmoil and threats to Fed spark huge bond fund outflows in April

UK investors pulled £1.24bn from bond funds in April 2025, marking the fastest rate of outflows since the early days of the pandemic in April 2020, according to figures from Calastone’s Fund Flow Index. It was the second consecutive month of significant selling, as geopolitical tension and monetary policy uncertainty rattled confidence in fixed income markets. While April’s redemptions were less dramatic than the £3.37bn withdrawn during the Covid-era liquidity crunch, they nonetheless exceeded September 2024’s outflows by 46%, and followed a similarly weak March.

Sovereign bond funds bore the brunt of the shift, suffering record net redemptions of £621m as investors weighed up the impact of global tariff threats and speculation about Federal Reserve leadership changes. In contrast, money market funds attracted £589m in net inflows, making April the fifth strongest month on record for the asset class. The last three months have seen the biggest inflows to money market funds in Calastone’s dataset, reflecting investor appetite for stability amid growing volatility. These low-risk vehicles offer steady prices and high liquidity, making them a safe haven during periods of market stress.

Equity funds told a more upbeat story, with £1.52bn in net inflows. This is the fourth straight month of gains. North America-focused vehicles led the charge, adding £1.51bn, much of it into passive funds. Buying momentum picked up sharply from 8 April, when speculation began mounting that President Trump might reverse his controversial Liberation Day tariffs. Global equity funds, heavily weighted towards US stocks, also saw strong inflows of £1.48bn.

Emerging markets and Asia-Pacific funds suffered record redemptions, with £591m and £534m withdrawn respectively. European equity funds lost £145m, while UK-focused funds saw a more modest £521m in outflows, their best result since mid-2024, excluding tax-distorted periods.

“Bond markets have whipsawed as investors try to price the impact on the global economy of ever-changing US policy announcements on trade as well as threats, both made and rowed back on, to undermine the independence of the US Federal Reserve," said Edward Glyn, head of global markets at Calastone. "The US dollar is also under pressure, harming confidence in US government bonds, which form by far the largest share of the global sovereign bond market. The turmoil in US bond markets has in turn pressured yields around the world. With most tariffs currently on hold and the Fed’s independence seemingly secure, markets rallied in the second half of April – bond yields were significantly lower (pushing up prices) at the end of the month than in the week following ‘Liberation Day’.”

 

Ant International and Barclays partner on AI-powered FX model

Ant International has partnered with Barclays to strengthen global treasury management by reducing foreign exchange (FX) risk and improving cost efficiency through AI. The collaboration centres on Ant’s proprietary Time-Series Transformer (TST) FX model, which uses advanced forecasting algorithms to support more accurate hedging strategies.

The partnership has already seen the successful completion of the first round of intra-group FX transactions between the two firms. At its core is Ant’s TST Model, a large-scale AI forecasting tool built on transformer architecture with close to 2 billion parameters. It predicts cashflow and FX exposure with over 90% accuracy across hourly, daily and weekly timeframes, helping to reduce unnecessary hedging and lower risk premiums charged by banks.

Barclays has integrated the model into its BARX NetFX hedging platform as part of its wider FX automation strategy. The integration enhances Barclays’ ability to forecast Ant International’s FX exposure more precisely and enables the bank to offer tighter, more efficient hedging. In turn, Ant International is using those savings to pass on more stable and competitive FX rates to its business clients, particularly across major currencies such as EUR and USD.

Ant’s collaboration with Barclays demonstrates the growing importance of AI in navigating global FX volatility. With cross-border payments projected to exceed US$290tn by 2030, the firms are positioning themselves to meet rising demand for real-time, data-driven treasury solutions. Initial trial transactions have already led to measurable cost reductions for Ant International’s clients. The companies plan to extend the solution to cover more currencies and broaden its application to support a wider range of business needs in future phases.

 

Tariffs and uncertainty to slow the Swedish economy

A wave of global uncertainty and newly introduced US tariffs are set to weigh heavily on the Swedish economy in 2025, according to Swedbank’s latest Economic Outlook report. The bank expects GDP growth to stall this year, with households holding back spending and businesses delaying investment.

Exports, one of the cornerstones of Sweden’s economy, are likely to suffer most. Swedbank warns that significantly higher US tariffs and unpredictable economic policy are generating extreme financial market volatility and weakening global growth, an unwelcome combination for an export-reliant economy. The bank expects these conditions to dampen goods exports and hold back investment decisions across Swedish industry.

Meanwhile, Swedish households have become increasingly pessimistic. Although real wages are gradually recovering after a prolonged period of high inflation, consumption is expected to remain subdued. Households are responding to a weaker labour market, rising financial uncertainty and slowing housing price growth by ramping up their savings. Swedbank now forecasts housing prices to remain flat this year, with a modest 5% rise in 2026.

The labour market is also showing signs of stress. Unemployment is forecast to remain high through 2025, with firms likely to postpone recruitment as global headwinds persist. Exceptions include the defence and public sectors, where hiring is expected to continue. Most other industries will see only a delayed recovery.

In response to the slowdown, Swedish economic policy is set to become more supportive. The Riksbank is expected to lower interest rates by 0.25 percentage points in both June and September, while fiscal policy will add further stimulus. Swedbank anticipates reforms worth SEK60bn in 2026, including income tax cuts and higher child benefits.

Despite the near-term challenges, Swedbank still sees underlying resilience. Sweden’s GDP is forecast to grow by 1.5% in 2025 and 2.5% in 2026, outpacing the euro area. With low public debt and room for targeted investment, Sweden is seen as relatively well-positioned to navigate the turbulence.

 

ECB taps private sector to explore digital euro use cases

The European Central Bank (ECB) has launched a new innovation platform to support its ongoing exploration of a digital euro, bringing together nearly 70 private sector players to test technical functionality and develop potential use cases for digital payments. Participants include banks, fintechs, start-ups, merchants and other payment service providers selected from more than 100 applications received after the ECB’s call for interest in late 2024. They will contribute to two workstreams: “pioneers” and “visionaries”.

The pioneers workstream is focused on practical development. It is testing how conditional payments – transactions triggered automatically when predefined criteria are met – could work using the digital euro. This could include use cases like automated payments upon delivery of online purchases. Participants will also explore broader day-to-day payment functionalities and test integration with their own systems using ECB-provided specifications and APIs.

Meanwhile, the visionaries workstream is tasked with conceptualising future use cases that address wider societal needs. One example under discussion is enabling people without bank accounts to open digital euro wallets at post offices, improving access to digital payments and financial inclusion across the EU. Both workstreams are operating within a simulated digital euro environment, designed to mirror how the ECB might support infrastructure for intermediaries if the currency is launched.

Findings from each workstream will feed into a broader ECB report due later this year, as the institution continues to assess whether and how to launch a central bank digital currency. Workshops with visionaries are expected to continue until May 2025.

 

Tariffs, rate signals and short-selling shifts shape securities lending in April

Global securities lending revenues rose slightly in April 2025, with lenders earning $856m, up 1.18% year-on-year, according to data from EquiLend. The modest increase comes amid turbulent market conditions driven by tariff uncertainty and speculation over the Federal Reserve’s interest rate outlook. Equity lending revenue fell 2% globally, with a 13% drop in fees offsetting an 11% rise in balances. In the US, returns from stock lending declined 15% year-on-year as average fees dropped by 24%, suggesting that long-short equity funds are reducing activity amid market volatility.

Equity revenues in EMEA were broadly flat compared to April 2024. Although fees were down 19%, balances rose by the same percentage. The Netherlands led regional performance, posting a 40% revenue gain driven by higher fees and loan balances.

APAC results were mixed. South Korea’s securities lending revenues surged 382% year-on-year after the government lifted its short-selling ban at the end of March, prompting a 241% monthly jump. Hong Kong also recorded a 121% rise. Other APAC markets saw month-on-month declines.

Fixed income lending saw stronger growth. Global revenues rose 12% as government bond and corporate debt lending activity increased. While fees declined for both categories, loan volumes climbed significantly, up 15% for sovereigns and 25% for corporates. Analysts point to rising demand for high-quality collateral and a pick-up in high-yield bond lending, driven by credit risk concerns. Meanwhile, interdealer financing generated $249m, a 3% rise compared to April 2024.

 

Passion, freedom and learning keep US small business owners upbeat

Despite continued economic headwinds, nearly half of US small business owners remain “very” happy, according to survey data released by VistaPrint to mark National Small Business Week. The research from April found that 42% of small business owners (SBOs) are currently “very” happy, while a further 39% report being “somewhat” happy. Just 10% describe themselves as unhappy. The results suggest that even amid tariff uncertainty, inflation and shifting consumer behaviour, optimism among entrepreneurs remains strong.

While the latest figures mark a slight drop from earlier polling in February, when 48% said they were “very” happy, the overall picture still reflects broad resilience. A key driver is control: 42% of respondents cited “freedom to set my own schedule” as what they enjoy most about running their business, followed by “doing something I love” (41%) and “interacting with people” (30%).

Internal motivators appear to matter more than external conditions. Of those who report feeling happier now than when they first launched their business, 32% attribute that boost entirely to internal factors such as personal growth or improved daily experience compared to just 8% who credit external improvements.

Happiness levels also vary by business size and tenure. SBOs with 51–100 employees were the most content, with 68% saying they are “very” happy, compared to 36% of those with 1–10 staff. The highest happiness rates were also found among businesses operating for 6–10 years. VistaPrint’s research also highlighted a desire for continued learning, with 73% of SBOs listing it among their top satisfiers. Most still favour human input over AI in marketing tasks, reinforcing the value of personal experience and control.

“Determination is synonymous with entrepreneurship,” said Emily Whittaker, Executive Vice President at VistaPrint. “While every small business owner’s pathway to happiness is different, it’s evident that by focusing on what they can control and seeking out learning opportunities, SBOs have what it takes to persevere even in the midst of macroeconomic uncertainty.”

 

£600m boost for Scottish grid as National Wealth Fund backs clean energy push

The UK’s National Wealth Fund (NWF) has committed £600m to ScottishPower as part of a wider £1.35bn financing package to accelerate critical upgrades to Britain’s electricity grid. The funding will support seven priority transmission projects designed to unlock renewable energy, cut congestion costs and improve energy security.

Led by Bank of America as sole debt arranger, the deal also includes backing from BankInter, BNP Paribas, Caixabank, Lloyds Bank, NatWest and Banco Sabadell. The NWF’s contribution aims to catalyse private investment into Iberdrola-owned ScottishPower’s plans to modernise infrastructure and support the UK’s clean power transition.

Grid upgrades are seen as vital to delivering the government’s Clean Power 2030 Action Plan. According to the National Energy System Operator (NESO), as much as £60bn will be needed by 2030 to enable a fully decarbonised power system. NWF’s investment marks a step towards closing that gap.

Among the key projects receiving support are the Eastern Green Link (EGL) interconnectors, long-distance transmission lines connecting Scotland to the North-East of England and Norfolk. NESO has identified EGL1 as a critical enabler of the 2030 goals, helping to alleviate bottlenecks in the UK’s most constrained transmission boundary and ensuring surplus renewable energy can be efficiently redistributed to high-demand regions.

In addition to the EGL schemes, funding will go towards grid enhancements at five locations across Scotland, including new substations, overhead line reconfiguration and cable upgrades to boost resilience and capacity.

ScottishPower’s parent company Iberdrola plans to invest £24bn in the UK energy network and renewables infrastructure through 2028. The NWF’s backing is designed to accelerate delivery timelines while crowding in additional private capital to help scale clean energy projects nationwide.

 

Balance taps RTP rails to streamline B2B ACH payments

Balance has launched a real-time bank connection feature designed to make ACH payments faster, simpler and more cost-effective for B2B merchants and buyers. The functionality, built on Real-Time Payment (RTP) infrastructure, enables instant account verification using only routing and account numbers. This cuts out the need for credential-based logins or multi-day microdeposit verification.

While ACH remains one of the most economical payment methods in B2B commerce, adoption has often been hampered by legacy onboarding processes. Buyers rarely have direct access to company banking credentials, and traditional methods for verifying bank accounts can take three to five days to complete. This lag not only frustrates customers but also delays merchant fulfilment, putting pressure on cash flow and customer satisfaction.

Balance’s capability sidesteps these hurdles by enabling real-time account verification at checkout. Merchants benefit from immediate payment confirmation, which allows them to release goods faster, improve cash flow, and speed up the order-to-cash cycle. For buyers, the simplified process reduces friction and enhances the purchasing experience.

Beyond streamlining onboarding, the RTP-enabled feature also plays a strategic role in scaling merchant operations. By making ACH payments as smooth as card payments, it allows businesses to lower their processing costs while maintaining high-quality service. The launch is part of Balance’s broader push to bring consumer-grade ease to complex B2B payments. In addition to RTP-powered onboarding, the platform supports AI-driven credit checks, billing, collections and cash application, all aimed at helping merchants reduce overheads, strengthen liquidity and scale efficiently.