Liquidating working capital

25 Mar

“A substantial change in the path of asset accumulation by sovereign wealth funds,” the IMF noted, “will likely have a direct effect on financial markets.” It also reported that Federal Reserve economists have estimated that five-year Treasury rates would rise by about 0.40 to 0.60 percentage points if foreign official inflows into U. Treasuries were to decrease by 0 billion in any given month.The Journal article also reported on other troubled spots for sovereign funds: lack of assets, and allegations of mishandling and corruption.The concept of advancing credit against working capital assets is predicated on the continuous turnover of the cash cycle such that advances against the most liquid assets of the business–inventory and accounts receivable– become self-liquidating as a matter of course.As illustrated in the adjacent diagram, ABL lenders provide credit at different points in the working capital cycle with advances being paid down with cash receipts.Tumbling oil prices are affecting more than just energy firms.

“A withdrawal of assets by sovereign-wealth funds against the background of liquidity concerns could lead to large price movements,” Adnan Mazarei, deputy director of the International Monetary Fund’s Middle East and Central Asia Department, told the Journal.Alp Eke, an economist in Abu Dhabi, told The National that Saudi Arabia depleted approximately 0 billion of assets during the past year.Beyond the Gulf, it was widely reported that Norway plans to tap its fund for the first time in 2016.State institutions withdrew at least billion in the third quarter, mostly to close the gaps in national budgets and reduce borrowing, the piece stated – with more money is expected to be withdrawn in the coming months.Moreover, the Wall Street Journal reported that sovereign-wealth funds yanked roughly 0 billion from asset managers in the six months to Sept. Among the big name funds affected, the FT reported, included assets managed by Black Rock, the world’s biggest fund house; as well as Aberdeen Asset Management, Northern Trust, Franklin Resources and Old Mutual Asset Management: “If the oil price remains low, we will see more redemptions from sovereign wealth funds,” Martin Gilbert, chief executive of Aberdeen, was quoted by FT.