We specialise in managing your financial risk. We provide you with strategic advice for hedging and structuring and arranging debt, as well as a range of other solutions, that are tailored to your industry and your business ambitions. We aim to add value, rather than simply managing the downside risks. The advice and solutions you receive are the result of over 25 years of experience providing independent advice to many industries. Our skilled financial markets specialists draw on wide-ranging expertise to deliver bespoke, strategic solutions specific to your sector. Our swift process, straightforward delivery and innovative solutions enable us to build long-standing relationships with clients over a range of sectors. With offices in the UK, US and Canada our team of experts are always close at hand.
Active financial risk management means awareness of your sensitivity to financial variables such as interest rates, foreign exchange rates, inflation and commodity prices; and ultimately mitigating these exposures effectively. We provide a range of hedging strategies and derivative solutions designed to reduce volatility and protect your profitability.
Corporates face many challenges when accounting for hedging instruments and their modifications due to business and refinancing changes that can occur over their lifespan.read more
Accounting for derivatives under IFRS, USGAAP and other local standards (e.g. new UK GAAP FRS101 and FRS102) can often be complex to understand and implement. Entities wishing to avoid earnings volatility that could adversely impact EBITDA and distributable reserves need to understand the accounting implications of hedging and in particular, hedge accounting.
JCRA provide a specialist service to assist your finance team. This includes pre-trade support, post-trade valuations incorporating counterparty credit risk (CVA/DVA), hedge accounting support and the preparation of disclosure notes for your financial statements.
Entities operating in the Renewable and Infrastructure sectors face significant challenges when accounting for their financial risk hedging instruments due to the nature of their risk exposures.read more
These exposures are usually very long dated and the hedges may need to be re-aligned/adapted over their lives due to changes in business plans, cash flow projections, re-financings, etc.
Accounting for derivatives under IFRS (IAS39 and IFRS9), US GAAP and other local standards (i.e. new UK GAAP (FRS101 and FRS102, effective since 1 January 2015) can often be complex to understand and implement. Particularly for those entities for which hedge accounting is usually a ‘must’ in order to avoid earnings volatility, that could adversely impact distributable reserves and covenants.
We provide a specialist service to assist your accounting teams, including pre-transaction support, valuations incorporating counterparty credit risk (CVA/DVA), support and expertise with hedge accounting, and the preparation of disclosure notes for your SPV’s financial statements.
We arrange cost-effective solutions to eliminate FX and IR ‘Event Driven’ Risks (M&A, IPO, Tender Offer, Project Finance etc)read more
We analyse the target’s FX risk during the Due Diligence stage of an acquisition and advise on how the risk might best be mitigated on an ongoing basisread more
Too often, FX hedging programmes are only reviewed after a turbulent period where they failed to mitigate FX risk. In fact FX policy needs continuous attention and refinement to protect the business.
Both private equity funds and corporates should be consistently revisiting their policy to ensure optimal hedging strategies.
That said, change of ownership often creates an opportunity to review the existing FX policy. At the very least, a PE house should be fully aware of the FX risk in a potential investment and how it is currently managed, if at all.
When conducting FX Due Diligence work on a potential investment for a Private Equity house investor, we evaluate the business’s FX exposure and its potential impact on key metrics (EBITDA, cash flow, financial ratios etc.), ensuring that the investor is aware of the exposure.
Post acquisition we often work with the investee company, assisting in formulating/improving the hedging strategy and assessing its performance. Optimal FX management necessitates working within credit constraints and around the inevitable fallibility of forecasts, whilst also considering natural hedges.
Market conditions and business ambitions vary, our tailored advice considers thisread more
We are experts in structuring and arranging debt solutions for our clients. We analyse your portfolio or individual assets, and advise on the best terms and conditions that can be achieved, taking into account varying market conditions.
We work closely with our private equity, corporate and public sector clients to design bespoke solutions, built on an individual assessment of risk exposure and business objectives. The application of structured hedging strategies often becomes a crucial part of any funding package, so our team of experts, based in the UK, devise customised strategies to determine the most timely and cost effective structure for you. We’re perfectly positioned to communicate your needs to the relevant markets, ensuring that you get the best possible results.
Often mandatory, but with the right advice you can make it work in your favourread more
Management of a transaction’s interest rate exposure is often a condition of sanction from providing banks who directly benefit from providing ancillary services. We evaluate your interest rate risk and create a hedging strategy that satisfies any particular lending requirement and meets your business objectives. Unlike the bank, our strategy advice is impartial. As an independent firm, we have no other motive than to deliver a strategy that is best aligned to your business goals.
Mitigate losses and risk associated with currency fluctuationsread more
Importers, exporters and investors with overseas assets are all exposed to foreign exchange risk. Failure to analyse risk and implement a bespoke hedging strategy can lead to significant losses.
We evaluate your business’s FX exposure: transactional and translational; short, medium or long term. Some FX exposures are easily identifiable, while others are less obvious. Optimal FX management involves the ability to work within credit constraints and around the inevitable fallibility of forecasts, while also considering natural hedges.
Your commodity exposure is connected to your commercial arrangements. We understand thatread more
We structure hedge solutions that match your objectives. We understand the interaction between your commodity exposure and other commercial arrangements such as debt covenants. Our pricing capabilities provide complete transparency on pricing, and our experience and contacts within this specialised area mean we can source the best hedge counterparties.
How do you mitigate exposure to index-linked income/expenditure? We assist with this, and moreread more
Inflation risk can arise within a business either explicitly, through a contractual arrangement, or implicitly, through cost or revenue base. It is important when assessing inflation hedging requirements to identify any natural offsetting hedge already present in your business. We can advise you on how to mitigate exposure to index-linked income/expenditure. We offer you our expertise to assess the risk, ensure that the appropriate hedging structure has been chosen and negotiate fair and transparent pricing with the hedge provider.
We support your accounting teams to effectively manage your derivativesread more
Whether your accounting team requires support or additional expertise with hedge accounting under IFRS, USGAAP and new UKGAAP, or derivatives valuations for internal management or financial reporting, we tailor our services to meet your needs. Our service can ensure accuracy of the reporting of your derivative instruments. Through the full life cycle of hedge accounting, or just one part of the process, we can help ease the workload on your accounting team. We provide guidance on whether to apply hedge accounting, help you meet documentation and effectiveness assessment requirements, and deliver the analysis needed for the relevant disclosures. If you need to convert into IFRS, US GAAP - or into the new UK accounting standard, FRS 101/102 - we can complete a comprehensive analysis of the impacts and considerations and support you with your conversion project. With valuations, we understand that the introduction of CVA/DVA adjustments has deepened the complexity of traditional counterparty bank valuations. We use sophisticated technology and processes to deliver bespoke derivatives valuations.
How do you manage surplus cash? Our independent advice ensures a strategy that’s best for youread more
The risks inherent in managing surplus cash are counterparty credit risk, concentration risk and liquidity risk. We work with you to establish the intentions for the cash holdings and consider the relative importance of security, liquidity and yield, as well as factors such as risk versus return and complete capital preservation. We advise on a wide range of short-term investment opportunities, including bank treasury deposits, call accounts and money market funds, designing and documenting bespoke cash management policies and strategies. Our independence means we refuse any introductory commissions from cash product providers, instead requesting that they divert this payment to you in the form of an improved rate of return.
Unbiased and expert opinion in hedging disputes based on forensic analysis and cross-sector experienceread more
If you have a hedging dispute related to hedge mis-selling, our experience and independence means we are well placed to help with the resolution of your case. We look at the core objectives of the borrower, review all correspondence and documentation pertaining to the hedge and the pricing, as well as any alternatives which may have been offered. Our systems recreate historical markets in which the instrument was traded to provide context and determine whether the hedge was suitable and appropriate at the time. A hypothetical hedging strategy and our opinion on what would have been the most suitable course of action are formulated. This is used to benchmark the hedge under dispute and provide guidance on an acceptable level of redress.
You may need an expert witness, if you have initiated a legal claim and require independent input as part of the litigation process. We can assist under instruction from legal counsel on the case. Our service encompasses the aspects described above and delivers an in-depth appraisal of the communication between defendant and claimant pre, during and post hedge execution. In the UK, all reports comply with requirements set out in Practice Direction 35.
Click here to see our explanations of some of the more commonly used hedging products for interest rates, foreign exchange and commodities.
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.