Trade receivable securitisations (TRS) remain an important and popular tool in the corporate treasury toolbox but with changing regulations and non-bank financiers entering the market, how should corporate treasurers approaching the world of TRS?
A guide produced by research firm Demica, The new world of trade receivables securitisation, covers four important points that corporates should assess before considering a securitisation.
- Evaluating the appropriateness of the receivables pool. The new generation of securitisation arrangers brings flexibility to the market, being able to tap 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.
Author of the report, Tim Davies, said: “Never before have treasurers had so much choice beyond their traditional banking relationships. 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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