Every time we run to the grocery store or pharmacy for household staples like baking soda or ibuprofen, we’re faced with a choice – to buy the name brand or the store brand. On the one hand, there’s something reassuring about purchasing a nationally-recognized brand; after all, if they can afford to advertise during the Super Bowl, surely they must have a quality product! On the other hand, why should we pay three times the amount for cough syrup when the store brand has the exact same list of ingredients? In truth, we often use brand recognition as a proxy for quality, whether or not that conclusion is valid. If we consumers had perfect information, we would only buy name brands if the cost premium were clearly justified by higher quality or value. This implies that subject-matter experts, such as…

Read More...

Corporate Case Study: Tracking & Reporting for Hedges Our Client: A global musical instruments manufacturer and distributor who actively manages FX and interest rate risk exposures. Situation: The company was managing over 1,500 derivative instruments in Excel and was applying hedge accounting for more than half of their derivatives portfolio. They were applying a hedge accounting methodology that caused some earnings volatility and wanted to evaluate whether another approach, such as regression for effectiveness assessment and hypothetical derivative method for measurement, could produce better results. The period end process was taking longer than our client wanted, and, unfortunately, it was necessary to enter and maintain every derivative into multiple systems or spreadsheets. The company was seeking to implement a hedging, hedge accounting & derivative reporting solution that would: Ease the administrative burden of tracking and reporting derivative transactions Eliminate risk…

Read More...

Managing the foreign currency rate changes that can impact returns Investors who purchase foreign assets run the risk that movement in local currency rates can reduce the underlying value of their expected/projected return. Many investors seeking to reduce such risks are wary of making large upfront cash outlays as well as potential breakage costs. Chatham Financial can help balance these concerns so that the risk is minimized most efficiently. Benefits of Chatham Foreign Currency Hedging Services Holistic approach: Chatham works with private equity investors to define the right strategy and instruments to support it. Our risk analyses help determine what percent of the investment to hedge, as well as the tenor, timing, and instruments needed to offset currency risks. From strategy and execution to reporting, Chatham analyzes and assesses risk exposure as well as structures and reviews policy to identify…

Read More...

Treasury Risk Management and Hedge Accounting Solution ChathamDirect is a treasury risk management and hedge accounting solution built on the knowledge and experience of Chatham Financial’s industry-leading advisors. ChathamDirect is an end-to-end solution that helps you see your exposure, make good hedging decisions and achieve good hedge accounting. Capture Foreign Currency Exposures ChathamDirect helps you easily gather your FX exposure data into one place and in one format. Cash flow forecasts and balance sheet exposures from all of your global businesses are consolidated using a standard format with centralized storage and a streamlined process. And, because ChathamDirect is a SaaS (Software-as-a-Service) platform, exposures can be entered and reviewed from all major browsers on both Mac and PC – anywhere, at anytime. Validate Exposures and View Hedge Coverage ChathamDirect helps you quickly analyze your exposures for accuracy, making it easy to identify missing and incorrect data…

Read More...

We have endeavored in this Ghostly little post, to raise the Ghost of an Idea, which we hope shall not put our readers out of humour with themselves, with each other, with the season, or with us. Enduser Scrooge sat busy in his counting-house. It was cold, bleak, biting weather, but Enduser Scrooge would not put more coals upon the fire, for the price of coal had abruptly risen and he had not hedged his exposure with Newcastle Index swaps. “Bah! Humbug!” he muttered as he poured over the details of his risk management portfolio. At length the hour of shutting up the counting-house arrived, and with an ill will he dismounted from his stool and locked up the office with a growl. After taking his usual melancholy dinner in his usual melancholy tavern, Enduser Scrooge beguiled the rest of…

Read More...