x
Interest rate and FX hedging for a UK buyout
Success stories

Interest rate and FX hedging for a UK buyout

Background
  • Multi-jurisdictional professional services firm
  • Ability to draw in multiple currencies and redenominate debt on a number of occasions during debt term
  • The loan terms included a minimum interest rate of 0% for EURIBOR and LIBOR respectively
  • The minimum hedging was 67 % of the term facilities for 3 years
Our Approach
  • Analysis of multi-currency exposures within the firm and identification of natural hedging via debt currency denomination
  • Benchmarking currency redenomination as part of the drawdown process to ensure accurate pricing
  • Thorough understanding of the business (highly cash generative, cash sweep mechanism, significant headroom on debt service covenants, LIBOR/EURIBOR floors) informing our recommendation on the interest rate hedging strategy
Benefits

Scrutiny on debt currency denomination

  • Analysis supporting the intuitive decision to have a mix of currency debt with the benchmarking saving 10x the spread first quoted by the loans administrative team
  • In order to achieve market-facing rates, it is essential to deal with a front-office FX team

Informed decision on hedging strategy:

  • Out-the-money caps for minimum term to allow any early repayment and to accommodate LIBOR/EURIBOR floors
 

More Private Equity successes

Success stories
Stakeholder management for syndicated LBO
Private Equity August 2018
Success stories
FX deal-contingent hedging for a large PE fund
Private Equity August 2018
interest rate
Success stories
Interest rate hedging for a privately owned company
Corporates, Private Equity June 2018

Contact us

If you need hedging or debt advice or would like to speak about how we could help your business, please get in touch.