Daily News: July 10, 2012

CFO: The Risk is Back for Corporate Cash


CFO noted in a recent article that the impending expiration of the U.S. government’s Transaction Account Guarantee (TAG) program at the end of this year will cause treasurers to face some tough choices in an interest-rate environment where many cash vehicles won’t earn enough to reward risk-taking.

CFO quoted Brandon Semilof, managing director of investment advisor StoneCastle Partners, as saying, “In a near-zero interest-rate environment, it didn’t make sense for companies to take on credit risk when they could get earnings credits for their deposits and have them fully insured. But in less than six months, treasurers will little choice but to take on some risk once again. Whereas now their counterparty is the U.S. government, next year it will be ‘XYZ bank.'”

To read the full CFO.com article, click here.