- Chatham was engaged to advise on the optimal solution to fulfil the mandatory FX and Interest Rate hedging requirement
- The debt was split into an onshore CNY tranche and an offshore USD tranche. The requirement was for 100% IR and FX hedging of the offshore tranche
- We gained an in depth understanding of the borrower’s business plan for the asset in order to establish hedging objectives.
- Chatham presented a range of hedging strategies to the client. Each strategy was reviewed with the client, explaining the advantages and disadvantages in the context of their hedging objectives.
- Chatham recommended the most suitable approach to the client, based on the review of strategies and subsequent discussion.
- Pricing was discussed with the lending bank and a reduction in the spread on the chosen strategy was negotiated, with the execution call ensuring this was adhered to by the bank.
- The client was clear on the hedging strategies available and the implications in the context of the business plan.
- In the context of a trusted relationship the client was able to ask questions of Chatham that, if asked of the bank, could have had pricing implications.
- The pricing negotiations saved the client over $300k, which was achieved through our knowledge and experience of the FX market.
- In addition to meeting the bank’s credit requirements, the chosen hedging strategy met all the client’s hedging objectives.