Corporate Derivatives: Practical Insights for Real-Life Understanding [Paperback]

Pablo Triana (Author)

Book Description

Publication Date: May 2, 2006

Corporate Derivatives explores the most important issues surrounding the use of derivatives by corporate sector, this practical resource brings you insightful and detailed analysis of all the latest trends and deals in the market – and provides solutions to the real challenges faced by corporates on a daily basis. Writing in a jargon-free and accessible manner, Pablo Triana guides you through this diverse and expanding field, providing answers to the important questions affecting today’s corporate derivatives landscape. Packed with highly relevant, purely practical, theory-devoid coverage of many of the most critical topics covering real-life corporate use of derivatives, the book can be seen as a collection of self-contained essays each of them attempting to become an easy-to-read and information-filled reference on a particular issue. Drawing on real life examples the book guides you through the key areas and developments in this important subject, including: * Evolution and nature of the corporate derivatives business * Product overview * 21st Century developments and case studies * Accounting standards and their effects on corporate hedging practices * Credit derivatives applications * Weather derivatives update With collaborations from leading practitioners, the book offers a refreshing and practically-focussed alternative to other derivatives texts that concentrate on product definitions, finance theory, or quantitative methods. A much-needed reference for those seeking a thought-provoking and practical source on the corporate derivatives business, including the key applied issues currently affecting corporates across the globe, it makes for essential reading not only for corporate treasurers and senior executives, but also for the bankers that cater to them and in general any person interested in the real world of corporate derivatives.

Editorial Reviews

Review

...balances rigor with market reality, creative analysis with informative research and sophisticated financial reasoning with good old common-sense -- Fernando Barnuevo, Managing Director Integrated Finance Limited (IFL) New York

I strongly recommend this book to anyone interested in the real world of corporate derivatives -- Oscar Ruiz, Asesores de Infraestructuras, Madrid

I strongly recommend this book to anyone interested in the real world of corporate derivatives. -- Oscar Ruiz, Asesores de Infraestructuras, Madrid

The author balances rigor with market reality, creative analysis with informative research and sophisticated financial reasoning with good old common-sense. -- Fernando Barnuevo, Managing Director Integrated Finance Limited (NY)

About the Author

Pablo Triana was a corporate derivatives banker before choosing to teach and write on the subject. He holds a Master of Science from New York University’s Stern School of Business and a Master of Arts from American University’s Economics Department. While at Stern he was appointed the president of the Financial Engineering Association. His professional experience includes corporate derivatives coverage for Spain at CSFB London, Madrid-based corporate Red Electrica, Washington DC-based InterAmerican Development Bank, and a US-based e-commerce start-up. He is currently profesor asociado at Instituto de Empresa, consistently ranked among the best European business schools. During his time at the school he has developed an innovative course entitled “Applied Corporate Financial Engineering” currently not available at any other top international school. He has also lectured at Johns Hopkins University and New York University. He has recently published non-technical papers in the world’s two leading derivatives publications; Risk magazine and FOW.

Product Details

• Paperback: 375 pages
• Publisher: Risk Books (May 2, 2006)
• Language: English
• ISBN-10: 1904339921
• ISBN-13: 978-1904339922
• Product Dimensions: 9.4 x 6.5 x 1 inches
• Shipping Weight: 2.3 pounds
• Average Customer Review: 3.5 out of 5 stars  See all reviews (2 customer reviews)
• Amazon Best Sellers Rank: #3,373,973 in Books (See Top 100 in Books)

More About the Author

Pablo Triana has successful derivatives experience at all levels: on the trading floor and as a professor, consultant, and author. He is a frequent contributor to business publications, including the Financial Times, Forbes.com, Breakingviews.com, and Risk magazine, among others. Triana is also the author of Corporate Derivatives. He holds a master of science from the Stern School of Business, New York University, and a master of arts from American University.

Customer Reviews

Most Helpful Customer Reviews

4 of 7 people found the following review helpful:

5.0 out of 5 stars I am the author, March 27, 2008

By 

Compound option - See all my reviews

This review is from: Corporate Derivatives: Practical Insights for Real-Life Understanding (Paperback)

As the author of a book I of course don't mind less-than-glowful reviews on the part of readers. What I do mind are less-than-glowful reviews that contain wild inaccuracies and that show utter ignorance as to the book's contents, objectives, and target audience.

Eric Sim's review would belong to the latter category. He obviously doesn't know much about the corporate derivatives business and derivatives publishing worlds. And, shockingly, seems to regard the contributions of top-notch pros as a negative.

It is one thing to say that a book is boring, badly-written, or off-track. It is quite another to criticize it based on one's completely misguided assumptions as to how the subject matter of the book operates.

Let me start by unveiling some of the many unseemly diatribes that Sim makes:
"I bought this book hoping to get some insights into the derivatives used by the corporate world, how bankers manage to make so much money selling derivatives and why so many CFO/Treasurers got themselves into trouble" - well, this book does provide lots of info on how real corporates use real derivatives in the real world, including some of the very latest applications (weather, credit), your typical textbook does not cover even 5% of such material; Sim didn't even read the book's description: it never claimed to describe how bankers make so much money (want to know, Sim? become a banker) or why companies get into trouble (derivatives don't just create trouble, they actually help lots of companies around the world everyday)

"The author doesn't seem to have much insights into the topic so much so that he needed to invite five practitioners to contribute to his book. Except for the one by Alex Pollock on hedge accounting, all contribution offers little value to the topic" - the author has sold derivatives to real corporates in the real world, so doesn't need outside help to write a book on corporate derivatives, however I thought it would be nice for the reader to count of the inputs of 5 world-leading experts (including Managing Directors from JP Morgan and Citigroup, the head of Citigroup's FX corporate derivatives structuring, the pioneer in corporate applications of credit derivatives, and a leading thinker on derivatives accounting), for some reason Sim finds such contributions sub-par, funnily enough for someone who claims to be yearning for real-life insights he has only enjoyed the practitioner contribution that happens to come from the only person in this book who is not a dealmaker; have you read the book, Sim? how can you say that Hirigoyen's, Garay's, Lierow's, and Knauff's contributions don't add value to the topic? what they talk about IS the topic!!!

"Chapter 3, however, are not likely to be real-life examples as I seriously doubt corporates will use compound option or basket option to hedge FX" Oh M-Y-G-O-D, corporates not using compounds and baskets???sorry, Sim, but you see they do and have been doing so for a long time, in fact those products were invented with corporate needs in mind, and just so you know compound options to hedge M&A related fx risk has been one of the most profitable business for bankers in the past few years

"The last chapter was on weather derivatives - how is that useful to most corporates, I dont know" - yes, you seem to not know too much, but weather derivatives (now ten years old) are of course used by corporates worldwide and the market is growing at neck-breaking pace

"For a person working in a bank, this book doesn't offer very new products or structuring techniques, neither will it help you solve accounting issues although it does offer some insights. For a person working for corporate, it will not help you choose appropriate derivatives structures" - wrong again, this book offers lots of info not previously available in hardcovers, a lot of practitioners (both bankers and corporates) have learned new stuff from the book, simply because they don't have time to know everything about their profession; this is not a book for accountants, but for dealmakers who need qualitative insights, not quantitative technicalities as to FAS133 and IAS39; I know for a fact that thanks to my book several corporate derivatives bankers and corporate treasurers got to know about key accounting issues related to swaps, options, and exotic products accounting

"and definitely not worth USD167" - this book is published by Risk Books, the world's leading specialist derivatives publisher, which has always priced their books above average; Risk is extremely selective in its selection process and its books are exclusively targeted to elite professionals and academics around the world; all top derivatives pros read Risk Books and Risk magazine

In sum, I felt that Sim's wildly misinformed and inaccurate criticism (which would have been more acceptable had it not been for the ubiquitously negative tone used) required a rebuttal, lest prospective readers may nakedly access misguided info on the book.

While the book's target audience are the bankers and corporates doing deals out there, I also tried to reach less expert audiences, even those who, like Sim, don't know much about the subject. That is, this book can help derivatives virgins get an idea as to things like compound and basket options, weather derivatives, or what the global head of fx corporate risk management at a leading Wall Street bank has to say.

But, rather than try to use the book to humbly learn about those (and many other) things, Sim surprisingly uses that which importance he doesn't appreciate (and is utterly ignorant about) as an argument against the book.
It is almost as if he saw the book's contents not as a chance to learn new stuff, but as a vehicle to find reasons to (unfairly) attack the book.

This book (the first tome on Corporate Derivatives published in almost a decade) was an attempt to provide useful insights (information plus analysis plus commentary) on a wide range of relevant issues pertaining use of derivatives for hedging purposes by non-financial companies. In this, I humbly believe that it has succeeded. For those who want to have a detailed (yet non-technical) idea as to the types of options and swaps used by corporates, the historical background, the accounting challenge, recent market developments (as of 2006), and new markets like weather and credit, few other sources oblige so well.
As much as the misinformed Sim may dislike this notion, my book was a welcome addition to the literature.

PS: I have given myself five stars for three main reasons: 1) Amazon requires some rating, 2) Giving less (say, three, as I originally and modestly planned) could send the wrongful message that the author is less than proud of his work, 3)I honestly do believe the book deserves five stars

2 of 5 people found the following review helpful:

2.0 out of 5 stars No useful insights, March 16, 2008

By 

Eric Sim (Hong Kong) - See all my reviews
(REAL NAME)   

This review is from: Corporate Derivatives: Practical Insights for Real-Life Understanding (Paperback)

I bought this book hoping to get some insights into the derivatives used by the corporate world, how bankers manage to make so much money selling derivatives and why so many CFO/Treasurers got themselves into trouble. It successfully failed to meet my expectation. The author doesn't seem to have much insights into the topic so much so that he needed to invite five practitioners to contribute to his book. Except for the one by Alex Pollock on hedge accounting, all contribution offers little value to the topic. It would be good if the author illustrate the hedge accounting concept with fair value hedge and cashflow hedge examples.

The two chapters (3 & 4) on products was only partly useful. Chapter 4 which covers examples of extention swap, putable swap and quanto swap do offer some insights into the products used by corporates. Chapter 3, however, are not likely to be real-life examples as I seriously doubt corporates will use compound option or basket option to hedge FX. Also why would a corporate buy a chooser option on Shares (Google shares in the book's example). These are typical products in derivatives text book like John Hull's Futures, Options and other Derivatives but John Hull didn't claim to offer practical insights for real-life understanding.

The last chapter was on weather derivatives - how is that useful to most corporates, I dont know. Why not commodities and carbon emission derivatives which probably have more applications? They will be applicable to airlines, shipping, mining and energy co at the very least.

The most useful part for me is in Chapter 1 - Corporate Derivatives: A Brief History - where the author covers in details two cases of derivatives went wrong: Gibson Greetings (Ratio Swap) and P&G (5/30 Swap) where P&G pays 17*5Y Treausry Yield - 30 Treasury Price.

For a person working in a bank, this book doesn't offer very new products or structuring techniques, neither will it help you solve accounting issues although it does offer some insights. For a person working for corporate, it will not help you choose appropriate derivatives structures.

This book will be good for university lecturers who want to add a bit of practitioners' flavour to their courses in derivatives. For that purpose, I also recommend a cheaper and much more fun-to-read book: Satyjit Das's Traders Guns and Money. Both published in 2006 but the latter talks about more products.

In summary, it offers little insights and definitely not worth USD167.