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16 October 2008
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As the Availability of Letters of Credit Declines, Counterparty Risk Assessment Is Critical InvestorsInsight, 10 October 2008 |
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Anecdotal evidence suggests that the market for letters of credit (LOC) is drying up. An overseas buyer provides the manufacturer of a product with an LOC—a loan guarantee from its bank—to prove that a payment can be made. Banks that refuse to draft LOCs, can have a disastrous impact on world trade. |
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Supplier Strategy in a Credit Crisis Procurement Strategy Council, 16 October 2008 |
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Executives must prepare for an environment of increased supplier insolvency risk and the disruption this would cause their companies. There are four actions that every procurement organization should be taking now: 1) review commodity or index driven pricing in your contracts, 2) consult with your treasurer about your company’s cash position and needs, 3) revisit your payment terms policy in light of the new credit environment, and 4) assess your supply base for criticality and solvency. |
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Prepare for an Increase in D&O Insurance Premiums Forbes.com, 15 October 2008 |
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Financial institutions should brace for a new wave of shareholder lawsuits. Other public companies may see their directors’ and officers’ liability insurance premiums skyrocket as a result. |
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Large Drop in Retail Sales in September The New York Times, 16 October 2008 |
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Sales slump for the third month in a row despite the back-to-school shopping season and lower gas prices. Retail sales will continue to suffer because a sharp decline in median household income is likely around the corner. |
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Travel Volume (and Costs) Begin to Decline BBC, 15 October 2008 |
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British Airways and Virgin Atlantic have both announced they are cutting fuel surcharges on their economy fares in response to the expected global slowdown. Although prices of oil and other commodities seem unlikely to rise back to recent levels, international travel is slowing. Marriott has already been affected and Boeing is cutting production. |
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Daily Capital Markets Review: Forecasts, Bernanke Revive Recession Fears; Stocks Tumble Corporate Executive Board, 14 October 2008 |
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This five-page summary includes news items regarding global liquidity, the TED spread, commercial paper and T-bill rates, currencies and commodities, and corporate debt spreads. If you would like to receive the Review after markets close instead of the next morning, please click here. In addition, we have included a bank credit default swaps analysis from the Treasury Leadership Roundtable. This analysis provides members with the most updated insights of financial counterparty risk from the credit market. |
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