As a large commodities business we are affected by volatility in interest rates. In this case we wanted to reduce our interest rate risk by hedging the floating Constant Maturity Swap (CMS) rate of our current customised long-term lease arrangement into a fixed rate. The current floating interest rate was based on a 10y CMS Swap rate and fixed based on the average of the five days fixing of the 10y CMS rate.
The team at ANZ proposed a straightforward floating to fixed interest rate swap, perfectly matching the floating lease payments (including averaging out the swap into five equal parts). Their proposal completely hedged our risk and helped us to monitor the interest rate swap market. Planning the time of our entry into the new contract to achieve the desired pricing and seamless execution.
President and Global Head of Treasury and Interest Rates, Olam International
About Olam International
Olam International is a leading agri-business operating from seed to shelf in 70 countries, supplying food and industrial raw materials to over 16,200 customers worldwide. Their team of 62,500 employees has built a leadership position in many businesses including cocoa, coffee, cashew, rice and cotton.