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We won a very large contract supplying aircraft electronics to a new US-based customer. The revenue stream from it would be 100% in USD – buying AUD and selling USD. The contract itself was separated into three distinct tranches executed over a number of years with certainty around tranche one only. All pricing had been fixed up front and we faced uncertainty around future earnings. We felt exposed as a business.
The solution ANZ recommended and executed included:
A deferred delivery option hedge solution, absolving us from future delivery obligations should the contract not continue beyond tranches one and two and the AUD/USD exchange rate move against us.
The ability to protect our future revenues in a credit effective manner.
100% hedge our currency risk.
The ability to protect ourselves in the long term with no obligation to deliver should there be unfavourable FX movements.
Our customer would like to remain anonymous.
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