Early
engagement
James was very happy to be engaged early in the process. This allowed him to meet with the client to determine their current needs, and tailor a solution appropriate for their current requirements (pending the approval of the proposed facility term extension).

The Global Markets Specialist was off to a good start with all the information you provided. Commsee revealed under the $10m Market Rate loan chevron that there was Interest Rate Risk Management (IRRM) on the account.
Involving the Global Markets Specialist as early as possible allows them to provide input into the CCL application you’ve prepared for the client.
Note: Make sure that you confirm the hedge details in Commsee with the Global Markets Specialist, as sometimes the hedge details are incomplete.


James reviewed Fantasia Foods’ current hedge. The company had $10m in debt that was put in place about two and a half years ago with a Cap Rate of 3%. They hedged the loan, paying an up-front of premium of $95,000.
They wanted the flexibility that a Cap Solution offered, with protection against rises above the 3% Cap Rate and the potential to benefit from falls in the interest rate. Taking into account the up-front premium, their effective rate would have been no more than 3.32%pa. Looking back, interest rates continued to fall over the period, to the benefit of Fantasia Foods.


Fantasia Foods wanted to compare a number of solutions: a Fixed Rate for $10m, starting in six months’ time; a fixed rate starting immediately; and the Cap Rate that could be offered under current market conditions at a cost of $9,500 per $1m, starting in six months’ time.


James presented Fantasia Foods with a Term paper detailing the various solutions so they could make an informed decision.
The client decided to wait for further local and international economic data to transpire before they made a decision. The Global markets specialist maintained regular contact with the client, providing them with markets updates, reassessing their client needs and providing them with updated pricing on the Interest Rate Risk Management solutions they wished to consider.
Six months later, Fantasia Foods felt the time was right to enter into an Interest Rate Risk Management solution for part of their debt, and they chose a two-year Fixed Rate solution for $10m.
Click the Fixed Rate button to learn more.