Outlook: Treasurers Face Myriad Changes

The past couple of years have been highly turbulent for the short-term investment market – right from the onset of the Covid-19 pandemic in March 2020.

Nobody had a playbook as to how to deal with the health crisis – arguably a once in a century black swan event – and, more than two years later, the world is still grappling with new variants, ongoing business challenges, and the longer-term fallout. In addition, corporates in specific sectors, such as travel and hospitality, faced collapse as worldwide lockdowns halted billions of dollars of revenue overnight.

Daniel LaRocco, Director, Money Markets, Northern Trust Asset Management (NTAM), recalls: “As a corporate treasurer, the knee-jerk reaction was to access as much liquidity as possible because nobody knew how long the situation was going to persist.”

Naturally, that liquidity was precious. It once again demonstrated the importance of cash. For example, during 2020, there was $1.7tr. worth of new investment grade bond issuance. “That $1.7tr. was the result of corporations going to the bond markets because funding levels were cheap after the Fed lowered rates,” LaRocco explains. “Corporates wanted that cash as a safety net for whatever their industries may encounter next. They needed that cash to make it through the coming few months.”

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