What a few weeks we’ve just lived through in the financial markets, with no shortage of turbulence, turmoil, and downright tribulation across the world. The S&P 500 tumbled more than one hundred points last week, a dubious distinction it had not achieved since the grim days of October 2008 – as of this writing, it’s fallen more than fifty points in a single morning. China’s yuan (partially) and Kazakhstan’s tenge (entirely) shifted to a freely floating currency from central management, causing the former to fall materially and the latter to plummet precipitously. A barrel of crude oil cost 32% less than it did at the outset of July. Against this backdrop of coordinated devaluating pressure, it’s no surprise that market volatility measures have jumped considerably. 2-year cap volatility, a measure of the cost of insuring against rising interest rates, has…

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Best Practices for Executing a Defeasance A successful defeasance requires the timely execution of a number of critical steps. Having an expert on your side is essential to ensure the defeasance is executed properly and fairly. Chatham’s defeasance consultants will help you navigate the process and will ensure you receive the best terms, market standards, and a fair cost. To help you understand borrower requirements and to illustrate how Chatham can assist with your defeasance, the following guide outlines the critical steps involved in a defeasance transaction. Download This Bulletin

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Last week regulators from the US, Britain, and Switzerland announced fines of $4.25 billion against several major financial institutions for conspiring to manipulate the foreign exchange markets. Simultaneous with the settlement announcements, the CFTC published select transcripts detailing chat room evidence of the manipulations. The transcripts are rough reading, especially if you aren’t a text-happy teenager well versed in financial slang and impervious to foul language. But because they afford critical background for our story, we’ve decided to translate a short excerpt from one chat into clearer, safe-for-work English. The excerpt comes from three traders discussing how they could manipulate the 4 pm WM fixing for GBP-USD (often referred to as “cable” by FX traders), selling large amounts just before the fixing to drive the rate down. Trader 1 (70 minutes until fix): it’s early but I am selling cable…

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As a global financial advisory services and technology solutions firm, Chatham Financial specializes in the debt and derivatives markets. Our solutions serve the investment and risk management needs of clients across a spectrum of industries and markets. As such, we have offices in the United States, Europe, Asia and Australia. Through our blend of expert advisory services and proven technologies, we enable companies to develop effective financial strategies and successfully execute programs that optimize their business goals. Founded by Mike Bontrager in 1991, Chatham is an employee-owned, independent market leader. Our global team of capital markets experts, risk management advisors, CPAs, lawyers, quantitative analysts, and technology developers serve more than 2,500 clients annually. As a purpose-driven organization, we are committed to making a positive impact for our clients, our associates, our communities, and the capital markets at large. We are…

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Chatham helps clients with unique currency and interest rate risk management needs, such as accessing hedging even in illiquid frontier market currencies, or through assessing, monitoring, and managing unhedged investments. Chatham has deep technical expertise in local currency investments in emerging and frontier markets. Chatham’s history in the microfinance sector dates back to the early 2000’s, which led to the formation of a team specifically foccused on inclusive finance in 2008. This team provides a broad range of advisory services to Microfinance, SME, and other impact-oriented sectors and has grown to become the industry’s leading risk management advisor. Chatham has executed hedging transactions in over 50 currencies globally. We have investigated, analyzed and provided indications for clients considering investments in over 30 other currencies. Our broad market expertise helps Chatham to identify and evaluate the available alternatives in any situation.…

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It’s amazing how time flies. Can this really be our first newsletter in June 2013? Why, that means our favorite holiday is one short week away! Of course, we’re talking about World Derivatives Day! To answer your first question: no, this is not a joke! If you’ve been reading our newsletters for a while, you may recall that in 1997, we at Chatham decided to dedicate one day a year to celebrating the mighty derivative and its use in financial risk management: more predictable than a LIBOR-Fed Funds dislocation; more foreseeable than a black swan event; and able to fix the largest of variable interest rate exposures with a single “done”! But this year, World Derivatives Day coincides with an important milestone in the now four-year-old realm of financial regulatory reform, and it is an inauspicious day for some. Beginning…

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A new film adaptation of F. Scott Fitzgerald’s masterpiece, The Great Gatsby, came to the silver screen on Friday. The film takes bold artistic license, dispensing with period music in favor of modern artists (Jay-Z, Beyoncé, Lana Del Ray, will.i.am, and Gotye, among others) for the soundtrack. So we decided to take our own license and imagine an additional modernized scene narrated by Nick Carraway, Gatsby’s neighbor who incidentally works in fixed income. I decided to go East and learn the bond business. Everybody I knew was in the bond business, so I supposed it could support one more single man. I bought a dozen volumes on banking and credit and investment securities, and they stood on my shelf in red and gold like new money from the mint, promising to unfold the shining secrets that only Midas and Morgan…

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European Market Infrastructure Regulation (EMIR) Beginning mid-March 2013, European entities will need to know and make representations regarding their regulatory status under EMIR. An entity’s regulatory status will determine the application of new EMIR requirements. In addition, non-EU entities that transact with EU counterparties should also consider their status under EMIR in order to determine how certain requirements may, directly or indirectly, impact them. More Information: EMIR Overview If you have any questions on EMIR, please don’t hesitate to reach out to your Chatham advisor. Overview of Title VII of the Dodd-Frank Act

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In six days, those who observe the Chinese calendar will usher in the New Year with traditional cuisine, family gatherings, and fireworks displays. 2013 will be the year of the snake, and because of the serpent’s association with delusion and subterfuge, those who subscribe to the mythology behind the calendar anticipate an added helping of deceptive behavior this year. So far, we’re off to a roaring start! First, on January 16th, Deadspin broke the story that Heisman candidate Manti Te’o’s inspirational girlfriend did not exist. The story had been propagated in the fall that Te’o’s girlfriend, whom he had met online, died tragically at 22 of leukemia just hours before a critical game against Michigan State. Inspired by her life, Te’o would go out to lead Notre Dame to an upset 20-3 victory, accruing twelve tackles over the course of…

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Demystifying Defeasance May/June 2009 Find out why defeasing a loan in today’s market can make sense. Download Complete Article

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