Client’s aircraft were funded via one month LIBOR securitised notes with a $305m hedging requirement.
The hedging policy in the securitisation required a swap but the arranger had stopped offering hedging.
ISDA contained PP step-in right with PP cooperation required to hedge.
Client had been struggling to replace the hedging for six years prior to our involvement.
An increase in the Fed funds rate was expected.
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Analysed commercial complexities brought about by legacy ISDA and reluctant PPs.
Generated interest in the hedge opportunity by marketing to several prospective counterparties.
Identified ideal counterparty with sufficient ratings and appetite to offer the required swap.
Worked with chosen counterparty to find solution to remove senior veto for the transaction.
Circumnavigated obstacles put in place by PPs to prevent client hedging as per investor's wishes.
Provided key recommendations in longer term plan to design better hedge documentation.
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