After a secondary buyout, a UK based business needed to put interest rate hedging in place in order to meet the requirements of its new financing facility.
- Ensure that existing hedges are terminated at a fair market price;
- Assist with the development of a new hedging strategy which was designed to meet the organization’s need for flexibility and ease of administration;
- Insulate the business from being overly burdened by day-to-day discussions with the eight banks involved. This was particularly time-consuming because all of the banks had the right to a share of the hedging and the company was keen to ensure that ISDA agreements were in place prior to hedging;
- Confirm that an appropriate price was achieved for the new hedging.
Results & Recommendations
Through structured management of each round of the quotation process, PMC was able to systematically eliminate less competitive banks. This approach enabled the resulting administration to be kept simple while ensuring that the company did not pay an ‘over market’ price for its hedges.