Deutsche Bank’s Capital Market Strategist team have developed - with the help of “dozens of corporate clients and DB employees” a Checklist of what to think about/to do now. It is the first edition and will be updated and resent on an ongoing basis.
The Checklist covers these areas:
- Business Strategy, Governance & Stress Testing
- Disclosure Requirements
- Liquidity & Bank Credit Facilities
- Bank Relationships & Counterparty Risk
- Capital Allocation & Structure
- Pension Obligations
- Supply Chain
- Customer / Accounts Receivable
- Hedging Strategies
- M&A / Restructuring
- Investor Relations
- Employee Relations and Management.
These are detailed Checklists as the points covered in the Hedging Strategies list below shows:
- Identify the extent to which forecasted exposures have changed, and the impact on hedging needs
- Consider adjusting notional hedging amounts or adding flexibility to existing program
- Reevaluate interest rate hedging approach for new and prolonged lower rate paradigm
- Assess cost and benefit of interest rate locks for historically low rates
- Evaluate unwinding of FX hedge positions, if necessary, to reflect downward revisions to overseas revenue
- Determine if FX hedge policy allows for use of options to take advantage of dislocations in the FX market
- Evaluate current hedged item definition, and hedge effectiveness measurement method, to ensure sufficient flexibility to maintain hedge accounting
- Reassess ability to execute larger transactions given low market liquidity as volatility remains high.
CTMfile take: This excellent Checklist just shows how much work the Coronavirus crisis is causing corporates worldwide. The business world is changing so fast, Checklists like this - particularly the ones that are updated regularly - are and will be invaluable.
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