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Interest rate hedging for Wren House Infrastructure
Case studies

Interest rate hedging for Wren House Infrastructure

Background
  • Wren House Infrastructure (WHI) acquired 100% of North Sea Midstream Partners (NSMP), which operates four large scale natural gas transportation and processing assets in and around the North Sea.
  • Total debt requirement to fund the acquisition was c. USD1bn with a seven-year tenor.
  • Wren House was looking to manage its interest rate risk exposure for the full term, and was considering a deal contingent hedge.
  • A syndicate of commercial banks provided the financing to fund the acquisition.
Our Approach
  • JCRA presented a clear hedging strategy with transparent pricing, drove the timely execution of the hedge and liaised with banks.
  • JCRA performed a comprehensive risk analysis to understand WHI’s risk tolerance to interest rate and deal contingent hedging, identified net interest rate risk exposures, and assisted the deal team with the integration of scenario analysis and dynamic hedging into their financial model.
  • JCRA benchmarked all available pricing and negotiated pricing variables with banks.
  • Our team assisted the legal counsel with transaction documentation, ensured EMIR and regulatory compliance throughout the process, as well as negotiating hedging documentation, such as commercial ISDA representations.
  • JCRA also managed the entire execution process.
Benefits
  • JCRA completed execution pricing, allowing WHI to appoint a market hedge coordinator.
  • Our deal team worked with the hedge coordinating bank to minimise WHI work and resources.
  • JCRA successfully managed a large scale hedge restructure with multiple stakeholders.
  • WHI obtained a highly competitive price for its desired hedging strategy.
 

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