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Corporate Treasury Solutions

Hedging

Navigate the waves of market unpredictability with our team of experts. We have solutions to managing the volatility in financial markets that may impact your profitability. With peace of mind, you can focus on what’s important- your business.

Hedging Services Offered


FX Hedging

 

Cash Flow Hedging

Helps to manage potential risks of foreign exchange fluctuations on your cash flow.

 

Balance Sheet Hedging

  • Protects your assets' foreign exchange value anywhere in the world.
  • Manages liabilities resulting from adverse FX movements.

 

Interest Rate Hedging

 

Interest Rate Exposure Hedging

Reduces vulnerability to interest rate changes and protects your floating coupon receivables from falling interest rates.

 

Combined Interest Rate and Currency Exposure Hedging

Manages exposure from foreign exchange and interest rates with a hybrid or singular product, such as Cross Currency Swap.

 

Contingent Cash Flow Management

Protects from risks that are dependent on event outcomes beyond your control, such as bidding for a project or approval outcome from a regulator.

 

Tactical Overlays for Competitive Purposes

Sharpens your competitive edge and moderates risks with strategic asset and account management.

 

Navigational Experience: FX Hedging

 

Scenario

ABC Company imports products from China. It has a 6-month payment term with the supplier in Renminbi (RMB) and wishes to hedge against an appreciating RMB.

 

Our Solutions

 

FX Forwards

With support from Maybank Global Markets, ABC buys CNH (offshore Renminbi) at the forward rate for delivery in 6 months, thereby locking in the amount of RMB payable at the end of 6 months at the very start.

 

Structured FX Options

Depending on ABC's view on Forex, flexibility and risk appetite, Maybank Global Markets has various structured FX solutions for its specific needs.

 

Benefits include:

• Strike rate can be more attractive than forward FX rate.
• Can be at zero cost.
• Allows client to participate in favourable markets.

 

Example: Participating Forward

• If spot fix < strike, client gets to sell full notional at strike rate.
• If spot fix > strike, client has to sell half the notional at strike rate and can sell the remaining half at prevailing spot rate.

The solution enables ABC to lock in their worst-case CNH hedge rate above their budget rate.

ABC also benefits from favourable CNH movement.

 

Navigational Experience: Interest Rates Hedging

 

Scenario

ABC Company has drawn down a Euro loan from Maybank to acquire a hotel in the US. The company will repay the loan in the loan currency (Euro) while its revenue is denominated in US dollars. ABC is concerned about rising interest rates, leading to higher interest costs, as well as the impact of a depreciating USD, which will affect its profitability as it repays its loans.

 

Our solutions

 

Interest Rate Swap

In executing an Interest Rate Swap, ABC exchanges its interest liability, based on a floating rate, for a fixed rate. This gives ABC certainty of its interest costs over the loan period, thereby protecting its cash flow in a rising interest rate environment.

 

Cross-currency Swap

Combined interest rate and currency risk arises when ABC's floating rate loan liability is in one currency, but its income is denominated in another currency. The Cross-currency Swap addresses this risk entirely, allowing ABC to pay a fixed interest rate over the loan period, while at the same time, matching the currency to the income it receives in US dollars. Hence, any interest rate and foreign exchange risk are both eliminated.