Why US firms fear FASB's rule 133
Not everything to do with FAS133 is bad news. For example, US companies will now be able to hedge expected anticipatory transactions, such as future foreign currency revenue streams. "Previously all you could do was buy an option or a series of options," says Peter Goetler, head of US debt capital markets for Deutsche Bank in New York. "But over a period of time that becomes expensive. FAS133 opens the door to using a whole host of instruments and transactions."
The major beneficiary of FAS133 - aside from accounting firms' bottom line - could well be the Euromarkets, or at least the euro-denominated Euromarket. For virtually any US corporate, to issue debt in non-dollar currencies was often little more than an exercise in arbitrage. There have been very few such deals this year, although not because of FAS133 - the market has simply not offered the economics that borrowers such as Fannie Mae require.
For those that needed non-dollar funds it was more often than not cheaper to issue tight in dollars and swap into the currency needed; for European corporates the Euromarkets were a poor third choice after the domestic and yankee market.