Foreign Currency Hedging for Corporates
As companies expand globally, currency risk can significantly impact both operational results and financial statements. This can stem from mismatching revenue and expense currencies, managing various operational currencies under the same corporate umbrella, or even short-term liquidity needs in particular currencies.
Oftentimes, companies may seek out economic exposure to a particular region through investments in assets or operations while also seeking to reduce earnings volatility caused by currency fluctuations. This, in turn, can impact financial reporting results or present real economic risk to the financial stability of the company.
That is why multinationals are increasingly focused on quantifying exposure and sensitivity, driving efficiency in hedging programs, and achieving preferred hedge accounting treatment for FX risk management programs.
Benefits of Chatham Foreign Currency Risk Management Solutions
Practical Impact and Ongoing Support: Whether it’s evaluating a specific short term exposure or building a sustainable holistic program to manage currency exposures and its associated accounting, Chatham provides the pricing transparency, strategic perspective, and technology tools needed to develop, execute and maintain best-in-class customized hedging programs.
Our approach includes board level advisory, program development, exposure analysis and aggregation, plus transaction execution and hedge accounting. We help quantify and understand risks so as to determine the acceptable percentage of risk to hedge, the tenor of the contracts and program coverage, the timing of operational hedging, and the choice of instruments that most effectively offsets the currency risks and achieves the desired hedge accounting treatment. Then we communicate your hedging program in a thoughtful and well-deliberated policy document, from strategy through execution.
External Market Perspective and Operational Efficiency: Chatham complements your team with deep expertise that comes from daily activity in the market. Our proven transparency and comprehensive risk management services help reduce the cost of hedging by ensuring that you execute the right strategy, using the right derivative at the right price, on fair terms, with ongoing support.
We work on more than 10,000 transactions worth over $350 billion notional annually, building and scaling our processes to efficiently arrange credit, negotiate documentation and execute each transaction cost effectively—either through our competitive auction platform or direct bank negotiation. We also ensure everything is compliant with Dodd Frank and EMIR