Corporate Case Study: Tracking & Reporting for Hedges Our Client: A global musical instruments manufacturer and distributor who actively manages FX and interest rate risk exposures. Situation: The company was managing over 1,500 derivative instruments in Excel and was applying hedge accounting for more than half of their derivatives portfolio. They were applying a hedge accounting methodology that caused some earnings volatility and wanted to evaluate whether another approach, such as regression for effectiveness assessment and hypothetical derivative method for measurement, could produce better results. The period end process was taking longer than our client wanted, and, unfortunately, it was necessary to enter and maintain every derivative into multiple systems or spreadsheets. The company was seeking to implement a hedging, hedge accounting & derivative reporting solution that would: Ease the administrative burden of tracking and reporting derivative transactions Eliminate risk…

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Oscar Wilde would have loved the Twitter genre; he was a veritable epigram machine. Even though everything he wrote is now at least a century old, it hasn’t lost relevance or zing. Think of how pertinent Wilde’s statements still are on topics as diverse as Narcissism: “To love oneself is the beginning of a lifelong romance.” Celebrity: “There is only one thing in the world worse than being talked about, and that is not   being talked about.” Identity: “Be yourself; everyone else is already taken.” Transcendence: “We are all in the gutter, but some of us are looking at the stars.” Modern conveniences: “We live in an age when unnecessary things are our only necessities.” For us, though, the best Oscar Wilde quote is from The Picture of Dorian Gray: “Nowadays people know the price of everything and the…

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Foreign Currency Risk Management If not properly managed, currency risk presents exposure that can have severe financial consequences to an organization’s financial statements. It is not uncommon for companies with currency exposure to underestimate the financial impact of currency fluctuations on their business and miss the opportunity to develop a robust currency risk management strategy. Even when currency expertise is available, organizations may oversimplify the complexities of the risk. Or, they simply lack the resources needed to properly manage the cash flow and balance sheet risk associated with foreign operations or investing abroad. Since its earliest days, Chatham has been managing all facets of currency risk for our clients. We help them develop and execute strategies to understand and offset their exposures. Whether the risk is operational or driven by a transactional event, our expertise supports clients in two key…

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As a partner to financial sponsors, Chatham is often enlisted to work directly with in-house treasurers and CFOs. We have worked with hundreds of companies that need help with their hedge accounting program or an analysis of their current and future exposures. We can augment in-house resources of the organization with our team of hedge accounting practitioners or assure the timely and accurate execution of monthly journal entries, effectiveness testing, valuations and reporting. In all cases, we work with your team to provide the continuity, consistency and timely information your stakeholders demand.

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At-a-glance management to save time and costs As a real estate investor, managing debt terms, payments, covenants and other details can quickly become a job that a spreadsheet alone can’t handle. The Chatham Debt Management system helps clients ease the burdens of managing and reporting on their debt portfolio. This web-based system centralizes all debt information and performs tasks such as tracking covenants, building payment budgets, and managing critical event dates. The system serves to guide the workflow for debt management processes while organizing key documents. The system also provides powerful reporting, such as scenario analysis under hypothetical future interest rate environments, portfolio-level weighted average rates and maturities, and linked hedge and debt instruments. How Chatham provides management of client debt portfolios Chatham’s Debt Management system for commercial real estate covers both day-to-day operations as well as major events, such…

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Overview of Reporting and Recordkeeping Title VII of the Dodd-Frank Act, along with the rules promulgated by the Commodity Futures Trading Commission (“CFTC” or “the Commission”), institute new swap data recordkeeping and reporting requirements for OTC derivatives that are regulated as “swaps.” End users will be subject to these requirements as of April 10, 2013. Regulators will require swap counterparties to maintain records and require certain data to be reported to a swap data repository (“SDR”) within specific timeframes. SDRs will warehouse the swap data and permit regulators access to monitor market stability, identify abuses, and enforce new rules. Additionally, real-time reporting requirements will increase price transparency to all market participants by providing a subset of data to the public on an anonymous basis. Part 45 Recordkeeping & Reporting – The swap data recordkeeping requirements under Part 45 will affect…

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