eNews March 7, 2013

March 7, 2013



News Briefs

  1. NACM Unveils Certified Credit and Risk Analyst Designation to Focus on Advanced Financial Analysis
  2. Maduro Takes Interim Presidency as Venezuela Mourns Chávez
  3. Bankruptcy Roundup: Vitro Controversy Over?
  4. State Department Releases Draft Economic Impact Report for Keystone XL Pipeline
  5. Energy 'Independence' and Exporting Debate on the Horizon
  6. Commercial Bankruptcies Continue Year-Over-Year Decline, Fall 29% in February

 

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NACM Unveils Certified Credit and Risk Analyst Designation to Focus on Advanced Financial Analysis

New learning tracks and the evolution of professional designations are part and parcel for keeping up with the varying and progressing needs of today's business professionals, including those in credit. After a review of existing programs, and careful consideration and development, NACM announced in March the latest in a long line of world-class program designations: the Certified Credit and Risk Analyst (CCRA).

The CCRA is unlike NACM's other longtime designation programs in that it is a standalone program. It exists outside of NACM's "Career Roadmap" that includes the Credit Business Associate (CBA), Credit Business Fellow (CBF) and Certified Credit Executive (CCE), the latter of which is still NACM's top-level designation for members.

The CCRA was created after Financial Statement Analysis II was removed from the CBF designation, with the new requirements effective January 1, 2013. NACM's Education Department updated the extracted course and renamed it Financial Statement Analysis, Interpretation and Credit Risk Assessment to better reflect its emphasis. The updated version is now considered by NACM to be the cornerstone of the CCRA.

"We realized that Financial Statement Analysis II wasn't for everyone, and that it served as a bit of a roadblock to the CBF for some members. However, we also recognized that some credit department personnel need that in-depth, advanced financial analysis background, which is why this standalone designation was created," said NACM President Robin Schauseil, CAE.

As with other designation courses, Financial Statement Analysis, Interpretation and Credit Risk Assessment can be taken by itself as a certificate session. However, earning the CCRA requires the completion of three courses: Basic Accounting, Financial Statement Analysis I and the new Financial Statement Analysis, Interpretation and Credit Risk Assessment. The methods available to complete each course vary and can be found under Education at www.nacm.org. The first opportunity to take Financial Statement Analysis, Interpretation and Credit Risk Assessment is a five-segment session and exam held at Credit Congress from May 18-22.

Though separate from the "roadmap" lineup of certifications, the CCRA will serve as a key program for credit professionals tied to deeper financial analysis responsibilities, and for those who will be in the future. It is also designed to build background and add key skill sets for those already pursuing a designation. "If you've earned your CBA and want, or need more financial analysis skills, this is for you," Schauseil said. "It's a great precursor to the CCE even though it's not a part of the NACM career roadmap. It's also a great precursor for NACM's Graduate School of Credit and Financial Management."

- National Association of Credit Management

To learn more about the CCRA, visit www.nacm.org, or call 410-740-5560.

Make Better Credit Decisions with Industry Credit Groups

Credit groups are an effective management tool, allowing credit professionals of different companies servicing the same customer, regardless of industry or trade, to compare information on collection history and provide a forum for the exchange of data about the most recent payment practices. The purpose of exchanging information is to help group members separate fact from fiction, so competent and realistic credit decisions about a customer can be made.

Managed and operated by NACM Affiliates nationwide:

  • Provide unparalleled networking opportunities
  • Assist in the exchange of credit information on common customers
  • Facilitate the receipt and analysis of information to make unilateral credit decisions
  • Provide a forum to discuss the latest developments on credit department procedures,
    equipment and other credit management functions
  • Support the discussion of account information and delinquent account reports
  • Adhere to federal antitrust guidelines

Contact your local NACM Affiliate to learn more about NACM credit groups and to find the group for your industry.

Maduro Takes Interim Presidency as Venezuela Mourns Chávez

The power vacuum left by the recent death of Venezuelan President Hugo Chávez has been filled, for the moment, by his former vice president and chosen successor, Nicolas Maduro.

Maduro will serve as the nation's interim president until an election can be called within 30 days. He will also stand as the currently-governing socialists' candidate in the election, the date of which has yet to be determined. Chávez's death, which was announced on television by a teary-eyed Maduro, triggered a week-long mourning period in Venezuela as tributes poured in from leaders around Latin America.

Where the oil-rich nation, one of only three on the planet capable of producing jet fuel-grade oil, goes from here is largely up in the air, despite the orderly transition of Maduro into Chávez's chair. "There really is no way to replace him," said NACM Economist Chris Kuehl, PhD in the March issue of Business Credit. "Throughout his career he made sure that no one shined as bright as he did," he added, predicting that "the structure will stay the same, but it's going to be wide open in terms of competitiveness. The opposition is going to start figuring out if they can exploit this and you're going to have a host of people who say 'I'm the successor.'"

The issue for Maduro is that he lacks the outsized personality necessary to fill Chávez's shoes and properly juggle the interests of the 50 or so families that essentially run Venezuela. Whomever these families support are the ones that end up in power, and Chávez, for all his flaws, was an exceptional politician who could properly handle the patronage system that funneled so much of Venezuela's wealth to so few.

Still, Kuehl noted that placing Venezuela in a sort of economic limbo could ironically be good for its citizens. "Chávez used every dime to placate the different factions," he said. "Without Chávez there is a potential that some of that money may actually end up in the hands of the population."

As for relations with the U.S., Maduro whistled the same tune shortly before Chávez's death, blaming outsiders for the former president's condition and drawing a sharp rebuke from the U.S. State Department. The White House, however, sounded a more dilatory note, focusing as it always has on the future and its commitment to the Venezuelan people rather than to their chosen leader. "At this challenging time of President Hugo Chávez's passing, the United States reaffirms its support for the Venezuelan people and its interest in developing a constructive relationship with the Venezuelan government," said President Barack Obama in a statement. "As Venezuela begins a new chapter in its history, the United States remains committed to policies that promote democratic principles, the rule of law and respect for human rights."

- Jacob Barron, CICP, NACM staff writer

To learn more about how regime changes can affect economies, look for the article, "A Tale of Two Cities," in the March issue of Business Credit.

FCIB Annual International Credit & Risk Management Summit in Prague

Register now for the Early Bird rate!

May 12-14, 2013
The Corinthia Hotel Prague, Prague, Czech Republic

Join us on May 12-14 at FCIB's Annual International Credit & Risk Management Summit to discover insight from distinguished speakers, participate in thought-provoking sessions and network with leading experts and your peers in an educational environment.

Sessions include:

• Basel III and the Impact on Working Capital Requirements, Letters of Credit and Guarantees
• Different Security Methods across Europe and Best Practices
• Risk Awareness in Today's Global Trading Conditions
• Early Warning Signals: Keeping a Pulse on Your Counterparties
• The Effects of Global Instability on the Treasury Department

The Early Bird rate deadline has been extended! Click here to register and save!

To view the entire program, click here.

We look forward to seeing you in Prague!

Bankruptcy Roundup: Vitro Controversy Over?

An inter-jurisdictional bankruptcy case already having an impact on U.S.-Mexico trade relations appears to be on its way to a somewhat amicable conclusion as an investor is buying up debt held by U.S.-based creditors. But it could take months or years to discover what kind of damage has been done regarding the Chapter 15 bankruptcy process.

Mexican-national David Martinez, who runs the Fintech fund, reportedly arranged to buy out U.S. hedge funds that had been objecting to Vitro SAB's bankruptcy plan, which had been approved in Mexico, but uncharacteristically denied in the United States. It is reported the U.S. creditors in question will receive 80 to 90 cents on the dollar as part of a deal that gives Fintech a 13% ownership stake in one of Vitro's many subsidiaries.

Judge Harlin Hale of the U.S. Bankruptcy Court in the Northern District of Texas put 10 subsidiaries of the large Mexican-based glassmaker into involuntary bankruptcy late last year over allegations of subsidiaries blocking efforts by U.S. collectors. Not long before, a U.S. appeals court upheld Hale's previous ruling refusing to recognize the terms of Vitro's bankruptcy plan approved in Mexico because he believed Vitro's plan "manifestly contravenes" U.S. bankruptcy policy and the interests of American bondholders and trade creditors. Typically, a judge would affirm such plans out of respect to judges in friendly nations and for trade relations. Some Mexico-based companies have already reported facing tougher credit standards, especially those relating to the rights of subsidiaries versus that of secured creditors or bondholders, and Lowenstein Sandler LLP's Bruce Nathan, Esq. intimated that it's now more possible that retribution could come against U.S. companies operating in Mexico in their courts as part of a backlash.

In other bankruptcy news, the long road to a seeming Chapter 9 filing continues in earnest in Detroit. Gov. Rick Snyder unveiled concrete plans to appoint an emergency financial manager. Soon after, Moody's Investors Service noted that this appointment clears the way for a quicker municipal bankruptcy filing. However, Moody's analysts noted that, while risk to creditors has increased, the appointment could result in the chance for the city to address its deep, well-documented problems in expedited fashion. It's worth noting that Detroit is the third worst-rated municipality in the nation by Moody's metrics, besting only Stockton, CA and Jefferson County, AL. Both of those have already filed for Chapter 9 protection.

For Jefferson County, AL, the long-stalled Chapter 9 proceedings lost one of its key combatants in recent days, as a French bank holding a portion of the county's debt sold its interests. Societe Generale is no longer a part of the dispute after selling off its holdings involved in Jefferson County's defaulted sewer warrants, though in the days following the deal, information on the buyer remained vague. Societe Generale, along with outfits including JPMorgan Chase, had been among the key creditors in the dispute. Jefferson County, at the time of filing, was the largest-ever Chapter 9 in the United States. A botched sewer retrofit venture comprised the vast majority of the county's upwards of $4 billion in debt. Legal battles have forced the 2011 filing to advance at a snail's pace.

- Brian Shappell, CBA, NACM staff writer

UCC Filing Services—Full Service, Flat Fees

Put Yourself in the Best Possible Position to Get Paid

Service begins with the Financing Statement Filing Program. NACM's UCC Filing Services prepares and files both Blanket and Purchase Money Security Interest Filings in addition to perfecting consignments. All you'll need after startup is the name, address and corporate structure of your customer. NACM's UCC Filing Services will take it from there.

Getting started is easy; NACM's UCC Filing Services can break down your business and distribution channel and determine the most effective type of filing for your business and we'll assist you in writing the two key critical elements, your security agreement and collateral description. Once written you're ready to file.

To get started, contact Greg Powelson, Director of NACM's Secured Transaction Services at gregp@nacm.org or call 410-919-8680.

To learn more about the UCC Filing Process, be sure to tune into Powelson's upcoming webinar on March 13. For more information, or to register, click here.

State Department Releases Draft Economic Impact Report for Keystone XL Pipeline

The U.S. State Department released a Draft Supplemental Environmental Impact Statement (SEIS) on the controversial Keystone XL pipeline last week, weakening the opposition's case that the project would have catastrophic environmental ramifications.

In the lengthy review, the State Department determined that Canada's oil sands, the spoils of which would be transported to the U.S. Gulf Coast by the Keystone XL pipeline, will be developed regardless of whether or not President Barack Obama denies a permit required for the project to continue. Prohibiting the pipeline's construction would also not have any measurable effect on U.S. oil consumption, the report added.

This pokes a hole in the hopes of pipeline opponents who hoped the report would vindicate their assertions that the project would exacerbate global climate change. However, the State Department also noted in its assessment that while the Keystone XL pipeline's environmental effects might be negligible, the U.S. can easily meet its energy needs without it, undercutting proponents who suggest that the project is a vital addition to the nation's energy infrastructure.

In a briefing following the release of the report, Assistant Secretary Kerri-Ann Jones of the Bureau of Oceans and International Environmental and Scientific Affairs was cagey about making any sweeping conclusions about the report and its evaluation of the pipeline. When asked if the project's environmental impact would be significant or an impediment to its approval, she replied "I think it's somewhat premature to get into that, because we feel that we need to have a public debate."

Proponents of the project, however, touted the report as proof positive that the Keystone XL pipeline is a universal good. "The Keystone XL project has become one of the most closely examined infrastructure projects in our nation's history—and it continues to pass with flying colors," said Karen Harbert, president and CEO of the U.S. Chamber of Commerce's Institute for 21st Century Energy. "Once again, the State Department has confirmed that this project is environmentally sound."

Harbert also touted the project's alleged foreign policy and economic benefits, which opponents have repeatedly called into question. "The Keystone XL pipeline will make more Canadian and U.S. oil available to us—oil that will not need to be imported from unfriendly places. It will create thousands of jobs and generate millions in revenue for state and local governments that badly need them," she noted.

- Jacob Barron, CICP, NACM staff writer

March Issue of Business Credit is on the Way around the World

The March issue brings together the finest experts to discuss current global opportunities other issues related to international business. Read about:

  • Free trade agreements in the works
  • The EU's newly revised late payment directive
  • Current business conditions in specific countries and regions
  • Accounts of business abroad
  • And more

Also, be sure to check out FCIB's specially-designed international education track session information contained within the special Credit Congress section of the magazine.

Energy 'Independence' and Exporting Debate on the Horizon

Talk of whether or not the United States' natural gas holdings are bringing the nation closer to energy independence hasn't been a real top-headline grabber. That could change as the push calling for the exporting of liquefied natural gas products in the near future, as well as proclamations of some type of energy renaissance, seems to be growing. However, some analysts believe talk of "independence" is way off the mark even as small steps have been taken.

A bipartisan group of lawmakers including Senators James Inhofe (R-OK) and Mary Landrieu (D-LA) addressed U.S. Department of Energy Secretary Steven Chu in a recent public letter highlighting the findings of the NERA Economic Consulting Report on natural gas exporting. The lawmakers attacked critics of increased exporting of natural gas and expansion of production amid report findings that it would be in the best economic welfare of the country to do so. They also note that production is expected to well outpace demand as infrastructure needs catch up, meaning price gouging on domestic turf remains somewhat unlikely.

Meanwhile, last week, the American Petroleum Institute, while noting "an energy revolution is underway in the U.S.," increased its media campaign efforts, promoting the job creation benefits of exporting natural gas. In addition, the U.S. Energy Information Administration noted the country's energy intensity, the amount of energy it takes to produce a dollar's worth of economic output, continues to drop for a number of reasons. Part of that stems from changes in U.S. energy production and consumption as well as structural economic changes. However, NACM Economist Chris Kuehl, PhD, is among many suggesting that those talking of energy independence should pump the brakes a bit, so to speak.

Kuehl noted in a recent column for the Finance, Credit and International Business Association (FCIB) that all the talk of more energy independence, including the boost in domestic oil production, fails to address that the United States still imports huge amounts of oil. He estimated that of the 20 million barrels per day consumed domestically, about 14 million barrels come from international sources, of which about 25% comes directly from the Middle East. That's only likely to grow when the economic recovery, long stalled, inevitably kicks into a higher gear.

"The U.S. is not energy independent and may never be given the needs of an expanding economy," said Kuehl. "When the recession still gripped the country, oil consumption was down. But, as the economy recovers, the gap between energy the U.S. can produce and what it needs will widen." In short, he estimated the United States is very unlikely to approach anything even resembling true energy independence any time in the near future.

Driven largely by a notable increase in imports of foreign oil products, the U.S. trade gap grew to $44.4 billion in January, the Commerce Department announced Thursday. The troubling, near 17% surge from December in the trade gap was about $2 billion more than forecast.

- Brian Shappell, CBA, NACM staff writer

Manual of Credit and Commercial Laws, Volume III: Construction Issues—Update Available Now!

New for 2013, language and state laws have been updated throughout the entire volume including:

  • Chapter on Personal Property Liens thoroughly rewritten
  • Chapter on Trust Funds updated
  • Chapters on Liens and Bonds updated

Entire volume updated to reference liens, bonds and trust funds applicable to the 21st century.

NACM's Manual of Credit and Commercial Laws continues to provide essential information for credit professionals, but now in a highly flexible and more affordable format—four volumes that may be purchased separately or as a comprehensive set.

Watch for future updates of volumes I, II and IV.

Click here to get your copy of volume III and for more information about Manual updates and the wide array of resources available to today's credit professionals.

Commercial Bankruptcies Continue Year-Over-Year Decline, Fall 29% in February

A measly 3,674 businesses filed bankruptcy in February, representing a 29% decline from the 5,159 commercial filings recorded in February 2012, according to data provided by Epiq Systems, Inc. Total commercial Chapter 11 filings also decreased by 21%, down to 609 filings in February from the 756 commercial reorganizations filed in February of last year, as bankruptcies, particularly those filed by businesses, continued their precipitous year-over-year decline.

The month-to-month figures told a different story, as February's commercial filing total represented only a 2% decline from January 2013's total of 3,734. Chapter 11 filings actually experienced a large 27% increase in February, when compared to January's 481 cases, but bankruptcies still remain at historic lows, despite any monthly fluctuations.

"The post-recession trends of reduced consumer spending, low interest rates and tighter lending standards continue to be reflected in fewer bankruptcy filings," said American Bankruptcy Institute (ABI) Executive Director Samuel Gerdano. "As these trends persist, expect bankruptcy filings to continue to decline in 2013."

Total bankruptcy filings in the U.S. decreased by 21% in February compared to last year, with 82,285 cases filed last month and 104,537 filed during the same period last year. Consumer filings also declined 21% to 78,611 from the February 2012 consumer total of 99,378.

The nationwide per capita filing rate (measuring the total filings per 1,000 population) in February increased to 3.11, marking a 2% increase from the 3.04 rate of January 2013. Fewer days to file in the month contributed to a 21% decrease in February's average total filings per day, which were 2,939 compared to February 2012's 3,734 total daily findings.

Tennessee's per capita filing rate was head and shoulders above any other state last month (6.43), and was followed by Alabama (5.38), Georgia (5.36), Illinois (4.86) and Nevada (4.53).

- Jacob Barron, CICP, NACM staff writer

 

To view past eNews issues or to visit the NACM Archives, click here.

 

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