War Stories Series: “All about Timing”
Tuesday, March 2, 2021
The markets have been and remain volatile such that opportunities arose for locking in a competitive funding rate. HBS-trained Denise Peters (name changed to protect the innocent), CFO, Treasurer, and manager of the firm’s bottom line, had wanted to raise a slug of capital to replace some high-priced, covenant heavy debt which was a constant headache for her over-worked (and under-paid) treasury department. Earlier in the year Ms. Peters tasked her eager-beaver assistant treasurer with watching the market for a window to tap the market. At two in the afternoon, her treasurer said the conditions appeared right whereupon the Ms. Peters arranged a call with her go-to investment bankers who was in regular touch with major private debt funds. As expected, the suspender-wearing wall street sharpie confirmed what Ms. Peters already knew: conditions were terrific for hitting the market. However, then the bankers threw are curveball even the hyper-prepared Ms. Peters had not anticipated; while her timing was right, her line-up was wrong. To hit the market, she needed to access investors which needed an NRSRO rating and the best her team could do was a four-to-five-week turnaround and even that was pushing it. After slamming down the phone with her good for nothing bankers she was determined to fix this problem pronto.
Two weeks later … Our diligent CFO, Denise Peters was dead set on fixing the aforementioned problems, did so by fixing the impediment, and was able to tap the markets at advantageous terms.
Nota Bene: While the tone of this article is jocular, the conditions mentioned are real and instructive.
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