Debt valuation methodologies for financial reporting
Debt valuation has long been a topic of debate among entities required to report fair value. Because of varied interpretations of accounting standards, methodologies for valuing debt have ranged from simply reporting the remaining principal balance to an application of complex algorithms. This wide variance in methodologies can result in inconsistent results and volatility not reflective of market conditions.
The following resources facilitate the appropriate application of valuation principles by providing a framework for measuring the fair value of debt that is rooted in a careful observation of relevant markets.
- Debt valuation applications and best practices—borrower's perspective
- Debt valuation—applications and best practices—lender's perspective [coming soon]
- Chatham Debt Management valuation best practices [coming soon]
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FAQ: LIBOR transition and debt valuation
Announcements made by the FCA, IBA, ISDA, and Bloomberg in 2021 stated that LIBOR’s final publication would occur on June 30, 2023. Loans indexed to LIBOR will transition to SOFR automatically following this date. In light of the announcement to discontinue LIBOR, many of our clients have...
Request your Q1 2022 Lending Market Overview
The purpose of this report is to present period over period changes in lending markets across key property types for use in marking debt to market for financial reporting. The Chatham fixed and floating indices for each property type represent how coupon rates and spreads have changed over time....
Request your Q1 2022 Average Market Credit Spreads report
Credit spreads shown are averages based on market rate conclusions for independent debt valuations conducted as of March 31, 2022. The market spread for an individual loan may vary based on property and loan characteristics, including, among others, location, tenant profile, cash flow, and...
Debt Valuation Market Update Q1 2022
In this webinar Jaran and Drew will highlight the key drivers of debt valuation for first quarter 2022. They will also cover lending markets and the mark-to-market impact.
Key takeaways: Semiannual Market Update webinar for real estate
On February 9, Chatham held our Semiannual Market Update webinar for real estate, presented by Matt Hoffman and Jackie Bowie. There was a macroeconomic update covering the U.S., U.K., and Europe, a discussion on hedging considerations and strategies, and a brief update on the IBOR transition. In...
Capital markets and accounting considerations in real estate M&A
Mergers and acquisitions involve a multitude of complexities and risks. Speed and accuracy at every stage of an acquisition is critical to not only winning the deal but also giving the transaction the best chance of financial and strategic success. Financial risk associated with the valuation of...
Debt valuation recommended policies and best practices
The purpose of this document is to provide a framework for understanding best practices in marking debt to market for the purpose of financial reporting. This document is focused on clarifying policy and practice nuances related to debt valuation.
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Chatham Financial is the largest independent financial risk management advisory and technology firm. A leader in debt and derivative solutions, we provide access to in-depth knowledge, innovative tools, and an incomparable team to help mitigate risks associated with interest rate and FX exposures.