After a few years of regulatory and economic uncertainty,multiple forces have combined to create an ideal environment forCFOs and corporate treasurers to put their capital to work. From aneconomic perspective, the strong economy should lead to a robustdemand in the loan and bond markets. At the same time, the 2017 taxreform law created visibility for CFOs that should provide themwith the ability to act with conviction on merger-and-acquisition (M&A) deals,stock buybacks, and capital investments.

Many CFOs and treasurers are looking to capitalize on thecombination of the booming economy, tax reform, and historically low interestrates, either by refinancing debt or restructuring their balancesheets. However, they are aware that this opportunity won't lastforever. With headwinds on the horizon in the form of rising rates and inflationary pressures,finance decision-makers should act now.

In light of this unique market opportunity, here are some tipsand factors CFOs and treasurers should keep in mind for theremainder of 2018 and beyond:

|

Lock in Rates

The reduced corporate tax rate and loosened regulatoryenvironment, along with a historically low interest rateenvironment have made it an advantageous time for financedecision-makers. For example, some corporations are bringing large amounts of capital back fromoverseas subsidiaries due to changes in tax law. In addition,savvy finance decision-makers are locking in fixed interest ratesbefore additional rate increases. TDeconomists are predicting the Federal Reserve will continue tomove up its policy rate a quarter point once a quarter.

|

Consider Shorter-Term Loans

Finance executives who currently have floating-rate loans shouldevaluate shorter-term loans. A shorter term will save money asinterest rates increase. In addition, corporations should considermoving to benchmarks that are rising at a slower pace. According toa recent article in the Wall Street Journal, companies are movingtoward one-month LIBOR, as opposed to the historically utilizedthree-month rate. The three-month contract—which is based on therate banks believe they will be charged to borrow over the courseof that time span—has risen 79 basis points (bps), to 2.41 percent,over the past year, according to LIBOR indexes published onBankrate.com.

Its one-month counterpart also increased, to 2.27 percent, overthe same period. The gap between one-month and three-month LIBOR,which reached its peak in April, has shifted thefixed-income marketplace. As of May, more than half of junk-ratedcorporate loans had interest payments tied to one-month LIBOR, upfrom less than a quarter at the beginning of 2016, according to data tracked by Wells Fargo.

The difference between the spreads is due to uncertainty in themoney markets and questions over U.S. businesses repatriating cash.Issuers have preferred to fund around the three-month level and, asa result, have pushed up the price for that note, presenting anopportunity for corporations to continue to borrow at a lowrate.

|

Be Mindful of Inflation

As treasurers allocate capital and lay out their financialplans, they need to consider rising inflation. Inflation is up 2.7percent over the past 12 months, according to the US Inflation Calculator, and is expected tocontinue to rise. Rising inflation ultimately impactsconsumer-oriented companies, which at times may notice less demandfor goods and services as prices rise. Most concerning is theincrease in gas prices, which can limit consumers' budgets.

Inflation can also hit organizations through rising businessexpenditures. Price increases for energy and other inputs canimpact a company's growth plan. Fortunately, we have seen manycorporations take costs out of their business where appropriate andget more productivity out of their existing workforce. Movingforward, having an efficient employee structure will be imperativeto stay ahead of inflation.

CFOs and treasurers have an opportunity to grow their businessesand improve the health of their balance sheets. Debt will notremain affordable for much longer. It's the perfect time toevaluate your bank loans and speak with your financial partner,which can bring deep industry expertise and product capabilitiesthat support you through every business cycle.

Steve Foley is headof U.S. corporate banking for TD Bank, where he oversees a team ofcorporate relationship managers with specific industry expertise,allowing the bank to have deeper understanding for a client'sbusiness. He has more than two decades of bankingexperience.