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Optimism from corporate treasurers

Corporate treasurers around the world are still feeling quite bullish about 2010. That was just one of many findings about the health of the global business environment revealed in a quarterly business confidence survey from EuroFinance.

 Among the key findings reported were:

 The treasurers’ agenda is now changing. Immediately after the collapse of Lehman Brothers, “counterparty risk” was corporate treasurers’ single
biggest concern. This worry has certainly not gone away, but it has slipped down from being the “number one” worry to second place, with 55 per cent of treasurers globally worried about counterparty risk compared with 70 per cent at the time of the last quarterly survey.

 This means that the fragile state of the economy is now at the head of treasurers’ worries, moving up the list from second place to first, and cited by 65 per cent of respondents, up from 56 per cent last time.

 The ability to forecast cashflow accurately at a time of continuing uncertainty is the treasurers’ third-greatest concern. n Criticism of banks is still widespread, however, as one third of treasurers around the globe claimed that banks were still not delivering acceptable lending terms to healthy companies. But that figure was less than half the 71 per cent level recorded previously.

 There were some other, tentative, positive signs: while some 23 per cent of treasurers said that the amount of spare cash in their businesses was in decline, a greater proportion, 35 per cent, said that it was increasing.

 When asked what their plans were for any spare cash, 44 per cent said that they would be reinvesting in their businesses – significantly more than the 25 per cent who will be paying off debt, or the 13 per cent who will simply boost their cash reserves. Treasurers think, on balance, that the US Federal Reserve will be the first major central bank to raise interest rates in 2010 with 38 per cent expecting US rates to come off the floor this year.

The European Central Bank is regarded as the second most likely to raise rates (27 per cent) and the Bank of England third (seven per cent). But more than a quarter of treasurers (28 per cent) do not believe that any of these three will raise rates this year.

 “Corporate treasurers have a front row view of the state of corporate health worldwide,” said a spokesman for EuroFinance.

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