We use cookies on our website to enhance your browsing experience. By continuing to use this site without changing your settings you consent to our use of cookies in accordance with our cookie policy. To learn more about cookies, how we use them on our site and how to change your cookie settings please view our cookie policy.

Close Cookie Bar

What have we been up to

NEWS & VIEWS

Donec varius pellentesque metus, at vehicula magna egestas quis. Sed purus ipsum, vehicula id libero laoreet, posuere ornare urna. In eu nulla leo. Nullam pellentesque dolor nec scelerisque consequat.

Deal Contingent

image
Share on Linkedin
+ -
If you thought this page is useful to your friend, use this form to send.
Friend Email
Enter your message
Financial risks (relating to FX, Interest Rate (IR), Commodities/Energy and Inflation) arising from M&As (Public or Private), IPOs or Project Finance can be complex to hedge. Those so-called event-driven risks may have several levels of uncertainty:
 
the exposure itself (contingent to the success/failure of the underlying deal)
the amount (for example in a tender situation or for deferred considerations/earnouts)
the tenor (closing date is usually unknown at signing).
 
A deal contingent hedge is a cost-effective solution to cover those risks and allows the client to walk away from the hedging agreement if the deal falls through as a result of pre-defined conditions precedent (CPs) not being met. For example, Deal Contingent hedges confer the ability to lock in the cost of an acquisition in a foreign currency (FX risk), or to ensure that financing costs of the transaction are pre-hedged (IR risk).
 
In both cases no cost is incurred if the deal does not complete as a result of CPs not being met.  Since deal contingents are tailor-made derivatives, pricing is by definition less transparent than for vanilla products. Hence we will in most circumstances arrange a tender process between competing banks. 
 
Very often, deal contingent hedging is required at a time when management time is at a premium. Speed is therefore of the essence. From designing an optimal hedging strategy to implementation with competitive pricing, our experience and contacts with the best banks in the market mean we are able to offer a streamlined and transparent process with a quick turnaround. 

ARCHIVED

RELATED ARTICLEs

Valuations and Hedge Accounting

image
4thJuly 2016

Whether your accounting team requires support or additional expertise with hedge accounting under IFRS, USGAAP and new UKGAAP,...

read more

FX Due Diligence

image
31stJuly 2017

Too often, FX hedging programmes are only reviewed after a turbulent period where they failed to mitigate FX risk. In fact FX...

read more

How can we help you

Have you got a question about how you hedge your financial risks, or structure and arrange your debt?

Find out how we can help you by contacting us today.

 

contact us

Stay Connected

Would you like news and views on local and global financial markets?

Sign up today to receive news straight to your inbox.

By providing your email address you agree to receive marketing emails from JCRA. We won’t ever spam you. See our privacy policy.

CLOSE

SIGN UP FOR NEWS

Subscribe