October 16, 2020

Reference Rate Reform: Economics & Accounting Treatment Impacts

Posted by Ruth Hardie
We always encourage hedgers to consider the economics of a transaction before looking at the accounting. If the economics don’t make sense, it doesn’t matter how favorable the accounting treatment is, it probably isn’t a good idea!
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October 12, 2020

LIBOR Transition: Indirect Valuation Impacts

Posted by Glenn Suarez
The direct impacts of the transition away from LIBOR to the use of an alternative reference rate such as the Secured Overnight Financing Rate (SOFR) have been well publicized. ISDA and ARRC have been releasing regular updates and suggested...
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October 07, 2020

LIBOR to SOFR: Are You Ready?

Posted by Farah Lotia
As LIBOR gets ready to end, SOFR is set to begin. While the derivatives market had been changing fairly rapidly prior to COVID-19, 2020 market dynamics have not closed the gap between expected and observed market prices. It’s critical that...
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September 01, 2020

Top 5 Balance Sheet Hedges That Create Risky Positions

Posted by Jeff Goggins
Once a company establishes a balance sheet program, it likely runs on auto-pilot from then on. Exposures are gathered, forecasted, netted, hedged and adjusted inter-month, and the results of the program are reported — but rarely is there a ...
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August 31, 2020

What to Watch for as LIBOR Fades Into History

Posted by Ruth Hardie
Businesses mired down by the impacts of COVID-19 are facing enough difficulties. But the march to LIBOR’s end has continued unabated. Governing bodies across the globe have made it clear that LIBOR will not extend beyond 2021. To date, we have...
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August 27, 2020

SOFR: Key Characteristics & Hedge Accounting Impacts

Posted by Ruth Hardie & Farah Lotia
As many of our readers already know, SOFR (Secured Overnight Financing Rate) has been selected by the Alternative Reference Rates Committee of the Federal Reserve to replace LIBOR in 2021. LIBOR represents the rate member banks borrow from each...
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July 02, 2020

Top Benefits & Limitations of FX Hedge Programs

Posted by Glenn Suarez
To implement a successful hedge program, it’s important that all parties involved know exactly what the hedge program will provide. This prevents disappointment and level sets expectations with management. Here are some common benefits FX hedge...
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June 30, 2020

Last-of-Layer Hedging for Financial Institutions

Posted by Ruth Hardie
Lenders such as banks, mortgage lenders, and credit unions manage large portfolios of fixed-rate loans. Typically, these assets are funded with floating-rate liabilities. This mismatch between fixed-rate assets and floating-rate liabilities can...
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June 25, 2020

6 Translation Accounting Nuances You Should Know

Posted by Jeff Goggins
The translation process converts local currency financial statements of subsidiaries into USD based financials for consolidation and reporting purposes. This is a relatively simple accounting process that’s typically performed by software in...
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