During the COVID-19 pandemic, Treasury Coalition is releasing a weekly Global Crisis Monitor, reflecting the attitudes of treasurers around the world towards the variety of issues that have sprung up around the crisis. In the most recent report, covering the week of 15-21 April, sentiment around debt and liquidity has improved somewhat. Corporates are most worried about accounts receivable, but are the most positive yet about both bank lines of credit and commercial paper issuance. The area of debt and liquidity that treasurers are most positive about, according to the survey, is central bank liquidity. Respondents have always been positive on this in every Global Crisis Monitor, but this past week saw positivity hit a new high.
The survey also polled treasurers on their estimates for the timeline of the pandemic across a variety of issues. They believe the ‘inflection point’, the expected point when the impact of the virus begins to diminish, will be within one month. Treasurers also believe that the virus will no longer be a significant health issue in five months time. In terms of financial normalcy, the latest poll shows that treasurers believe business will return to the state it was in before the COVID-19 outbreak in 9 months time.
Perspectives on the past month
With the Global Crisis Monitor results now a month old, certain trends can be extrapolated from the data. On the Strategic Treasurer website, content creator Claire Cotner has taken a look back at the first four weeks of the polling data to see how opinions have shifted.
Looking at the organisational and headquarter country response to the outbreak, the data shows that corporates have been consistently positive. While thoughts about the impact of COVID-19 on both their organisation and community and family were negative for treasurers at the start of the survey, both of these metrics have climbed into the positive category in the past week. In addition, treasurers’ view of both their organisations response and headquarter country response began with a strong positive sentiment and retain that four weeks later.
In terms of current financial concerns, accounts receivable has consistently topped the list each week of the Monitor, finishing the first four weeks with ten times as many negative responses as positive. Cotner notes it can be assumed that this negativity reflects two aspects of the situation. First, the economic slowdown due to the shutdown and other mitigation factors in play. Second, organisations conserving cash by slowing down the payment process. This has continued to consistently worsen over the prior week.
Concerns regarding accounts payable have mounted as well over the third and fourth weeks (the question was added in the third week), as more than 30% and then 40% of organisations are paying more slowly than has been their historical norm.
On the positive side, despite most other debt and liquidity measurements taking a negative showing the majority of weeks, as noted earlier, central bank actions to provide liquidity have seen consistent, substantially positive sentiments from respondents. Cotner says that it’s reassuring to see that, while factors out of the control of governing bodies and the business world are creating a highly challenging situation, most professionals have a relatively high level of confidence in the effectiveness of the actions and measured responses that reside within organisational and governmental control, as shown both in the headquarter country and company response, and the positive attitudes towards central bank actions.
Looking ahead, and responses to questions about the economic outlook over time have resulted in an interesting set of statistics. The expectation of time until financial normalcy is reestablished has consistently shifted further and further away by a total of three months since the survey’s beginning. As noted, the most recent set of responses yielded a median of 9 months until normalcy, pushing the estimate into 2021. Notably, however, a significant minority of respondents indicated over a year until financial normalcy.
A separate set of questions asked respondents to rate their sentiments on the financial outlook for particular timeframes, with one question asking what they anticipated in three months, and another for 12 months. Thus far, the 3-month outlook has been substantially negative, and the 12-month outlook more neutral. Both are trending more positive as time goes by, however, with the median response for the 12-month outlook crossing the halfway mark into positive territory during the fourth week.
Looking at these two sets of responses provides an expected inflection point for when the economic outlook should shift from negative to positive. As of week 4, this inflection point sits at approximately 10 months, one month beyond the 9-month median response to the question regarding the return to financial normalcy.
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