CASE STUDY: FX Risk Management
Large Currency Transactions and Hedging
“ANZ has a dealing team that truly understands the intricacies of the NZD/USD pair.”
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We funded a major NZD$1bn acquisition in New Zealand with NZD debt, but wanted to repay it using our USD surplus. We knew doing this would expose us to an NZD/USD currency risk that needed hedging, so we went looking for a bank that would give us the best possible price.
ANZ’s dominant positon in NZ and access to NZD liquidity meant they were able to execute our large-scale transaction in one go and provide us with the best price.
The ANZ deal team did everything:
- Obtained the necessary clearance from the Philippines and Singapore-based trading, credit and Credit Valuation Adjustment (CVA) teams.
- Developed, evaluated and discussed with us targeted hedging ideas including Cross-Currency Swap, FX Options and Coupons Swaps and FX Forwards.
In the end we decided to hedge our currency risk using an FX Forward Contract because it locked on the exchange rate at maturity and was straight forward to execute.
When we felt that the market was ready for us to hedge, ANZ provided a dealable price and executed the contract in one go with the lowest execution price.
Our customer would like to remain anonymous.
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