x
author: Array
_author: Array
article_modules: Array
_article_modules: Array
modules_0_title: Array
_modules_0_title: Array
modules_0_content: Array
_modules_0_content: Array
modules: Array
_modules: Array
modules_2_download_box_download_box_title: Array
_modules_2_download_box_download_box_title: Array
modules_2_download_box_download_box_button_text: Array
_modules_2_download_box_download_box_button_text: Array
modules_2_download_box_download_box_button_url: Array
_modules_2_download_box_download_box_button_url: Array
modules_1_title: Array
_modules_1_title: Array
modules_1_download_box_download_box_title: Array
_modules_1_download_box_download_box_title: Array
modules_1_download_box_download_box_button_text: Array
_modules_1_download_box_download_box_button_text: Array
modules_1_download_box_download_box_button_type: Array
_modules_1_download_box_download_box_button_type: Array
modules_1_download_box_download_box_button_url: Array
_modules_1_download_box_download_box_button_url: Array
modules_1_download_box: Array
_modules_1_download_box: Array
modules_2_quote_author: Array
_modules_2_quote_author: Array
modules_2_enable_tweet: Array
_modules_2_enable_tweet: Array
modules_2_quote: Array
_modules_2_quote: Array
modules_3_title: Array
_modules_3_title: Array
modules_3_content: Array
_modules_3_content: Array
modules_4_title: Array
_modules_4_title: Array
modules_4_content: Array
_modules_4_content: Array
modules_5_background_image: Array
_modules_5_background_image: Array
modules_5_video_title: Array
_modules_5_video_title: Array
modules_5_video_thumbnail_url: Array
_modules_5_video_thumbnail_url: Array
modules_5_video_url: Array
_modules_5_video_url: Array
modules_5_video_duration: Array
_modules_5_video_duration: Array
modules_5_video_description: Array
_modules_5_video_description: Array
modules_5_video_embed_code: Array
_modules_5_video_embed_code: Array
modules_6_title: Array
_modules_6_title: Array
modules_6_content: Array
_modules_6_content: Array
modules_5_image_caption: Array
_modules_5_image_caption: Array
_yoast_wpseo_content_score: Array
article_modules_1_download_box_download_box_title: Array
_article_modules_1_download_box_download_box_title: Array
article_modules_1_download_box_download_box_button_text: Array
_article_modules_1_download_box_download_box_button_text: Array
article_modules_1_download_box_download_box_button_type: Array
_article_modules_1_download_box_download_box_button_type: Array
article_modules_1_download_box_download_box_button_url: Array
_article_modules_1_download_box_download_box_button_url: Array
_yoast_wpseo_primary_category: Array
_wp_old_slug: Array
_thumbnail_id: Array
page_summary: Array
_page_summary: Array
modules_0_module_title: Array
_modules_0_module_title: Array
modules_0_text_content: Array
_modules_0_text_content: Array
modules_0_background_color: Array
_modules_0_background_color: Array
modules_0_slider_items: Array
_modules_0_slider_items: Array
modules_0_slider_items_0_logo_image: Array
_modules_0_slider_items_0_logo_image: Array
modules_0_slider_items_0_logo_link: Array
_modules_0_slider_items_0_logo_link: Array
modules_0_slider_items_1_logo_image: Array
_modules_0_slider_items_1_logo_image: Array
modules_0_slider_items_1_logo_link: Array
_modules_0_slider_items_1_logo_link: Array
modules_0_slider_items_2_logo_image: Array
_modules_0_slider_items_2_logo_image: Array
modules_0_slider_items_2_logo_link: Array
_modules_0_slider_items_2_logo_link: Array
modules_0_slider_items_3_logo_image: Array
_modules_0_slider_items_3_logo_image: Array
modules_0_slider_items_3_logo_link: Array
_modules_0_slider_items_3_logo_link: Array
modules_0_slider_items_4_logo_image: Array
_modules_0_slider_items_4_logo_image: Array
modules_0_slider_items_4_logo_link: Array
_modules_0_slider_items_4_logo_link: Array
modules_0_slider_items_5_logo_image: Array
_modules_0_slider_items_5_logo_image: Array
modules_0_slider_items_5_logo_link: Array
_modules_0_slider_items_5_logo_link: Array
modules_0_slider_items_6_logo_image: Array
_modules_0_slider_items_6_logo_image: Array
modules_0_slider_items_6_logo_link: Array
_modules_0_slider_items_6_logo_link: Array
modules_0_slider_items_7_logo_image: Array
_modules_0_slider_items_7_logo_image: Array
modules_0_slider_items_7_logo_link: Array
_modules_0_slider_items_7_logo_link: Array
modules_0_slider_items_8_logo_image: Array
_modules_0_slider_items_8_logo_image: Array
modules_0_slider_items_8_logo_link: Array
_modules_0_slider_items_8_logo_link: Array
modules_0_slider_items_9_logo_image: Array
_modules_0_slider_items_9_logo_image: Array
modules_0_slider_items_9_logo_link: Array
_modules_0_slider_items_9_logo_link: Array
article_modules_0_title: Array
_article_modules_0_title: Array
article_modules_0_content: Array
_article_modules_0_content: Array
article_modules_0_download_box_download_box_title: Array
_article_modules_0_download_box_download_box_title: Array
article_modules_0_download_box_download_box_button_text: Array
_article_modules_0_download_box_download_box_button_text: Array
article_modules_0_download_box_download_box_button_type: Array
_article_modules_0_download_box_download_box_button_type: Array
article_modules_0_download_box_download_box_button_local_url: Array
_article_modules_0_download_box_download_box_button_local_url: Array
article_modules_0_download_box: Array
_article_modules_0_download_box: Array
article_modules_1_quote_author: Array
_article_modules_1_quote_author: Array
article_modules_1_enable_tweet: Array
_article_modules_1_enable_tweet: Array
article_modules_1_quote: Array
_article_modules_1_quote: Array
article_modules_2_title: Array
_article_modules_2_title: Array
article_modules_2_content: Array
_article_modules_2_content: Array
_wp_old_date: Array
article_modules_0_download_box_download_box_button_url: Array
_article_modules_0_download_box_download_box_button_url: Array
_dp_original: Array
_edit_lock: Array
_edit_last: Array
article_modules_0_download_box_download_box_button_access: Array
_article_modules_0_download_box_download_box_button_access: Array
modules_0_slider_items_10_logo_image: Array
_modules_0_slider_items_10_logo_image: Array
modules_0_slider_items_10_logo_link: Array
_modules_0_slider_items_10_logo_link: Array
modules_0_slider_items_11_logo_image: Array
_modules_0_slider_items_11_logo_image: Array
modules_0_slider_items_11_logo_link: Array
_modules_0_slider_items_11_logo_link: Array
article_primary_tag: Array
_article_primary_tag: Array
modules_0_slider_items_0_casestudy_link: Array
_modules_0_slider_items_0_casestudy_link: Array
modules_0_slider_items_1_casestudy_link: Array
_modules_0_slider_items_1_casestudy_link: Array
modules_0_slider_items_2_casestudy_link: Array
_modules_0_slider_items_2_casestudy_link: Array
modules_0_slider_items_3_casestudy_link: Array
_modules_0_slider_items_3_casestudy_link: Array
modules_0_slider_items_4_casestudy_link: Array
_modules_0_slider_items_4_casestudy_link: Array
modules_0_slider_items_5_casestudy_link: Array
_modules_0_slider_items_5_casestudy_link: Array
modules_0_slider_items_6_casestudy_link: Array
_modules_0_slider_items_6_casestudy_link: Array
modules_0_slider_items_7_casestudy_link: Array
_modules_0_slider_items_7_casestudy_link: Array
modules_0_slider_items_8_casestudy_link: Array
_modules_0_slider_items_8_casestudy_link: Array
modules_0_slider_items_9_casestudy_link: Array
_modules_0_slider_items_9_casestudy_link: Array
modules_0_slider_items_10_casestudy_link: Array
_modules_0_slider_items_10_casestudy_link: Array
modules_0_slider_items_11_casestudy_link: Array
_modules_0_slider_items_11_casestudy_link: Array
modules_1_module_title: Array
_modules_1_module_title: Array
modules_1_background_color: Array
_modules_1_background_color: Array
modules_1_module_type: Array
_modules_1_module_type: Array
modules_1_select_posts: Array
_modules_1_select_posts: Array
modules_1_link_text: Array
_modules_1_link_text: Array
modules_1_link_url: Array
_modules_1_link_url: Array
modules_2_text: Array
_modules_2_text: Array
modules_3_module_title: Array
_modules_3_module_title: Array
modules_3_background_color: Array
_modules_3_background_color: Array
modules_3_column_ratio: Array
_modules_3_column_ratio: Array
modules_3_editor_content_left: Array
_modules_3_editor_content_left: Array
modules_3_button_text_right: Array
_modules_3_button_text_right: Array
modules_3_button_type_right: Array
_modules_3_button_type_right: Array
modules_3_button_url_local_right: Array
_modules_3_button_url_local_right: Array
Private Equity Deal Digest Q3 2018
Reports & Whitepapers

Private Equity Deal Digest Q3 2018

Benoit Duhil de Benaze Private Equity October 2018
Strong economic growth and the tailwind of available debt continue to support deal activity in the private equity space. A fair amount of this is due to new deal flow, but we are also seeing high levels of refinancing activity.

Many of our clients are improving their covenants, extending debt terms and lowering margins. With concerns growing across the market that there may be a recession ahead, it feels rather like “fixing the roof while the sun is shining”. A gloomy thought, perhaps, but we can take comfort in the fact that businesses can set themselves up for stable and secure funding out to 2025. Any deterioration in the funding markets will now be less of a worry – presuming that businesses have also pre-hedged their interest rate risk!

From our hedging vantage, the story continues to be one of interest rate divergence across the key markets. While rates continue to rise in the US, EUR rates seem unlikely to drift very far from their record lows despite QE coming to an end. This leads borrowers in EUR to either not hedge at all, or to take out some ‘bottom drawer’ insurance in the form of ‘cheap’ out of the money interest rate caps. In USD the hedging products of choice are still split between swaps and caps, and in GBP a slight bias towards caps (mainly to ensure the impact of the interest rate floor is benign). The impact of this interest rate divergence also manifests itself in the currency markets and the hedging of FX risk.

JCRA recently published an article on debt redenomination highlighting this dilemma. We are seeing a high proportion of our clients paying much closer attention to their currency exposures in general and not making the automatic decision to exploit natural hedging through debt redenomination while the interest rate differential between USD and EUR is so wide.

While it feels rather like the market is suffering from Brexit fatigue, it is certainly a topic getting as much attention now as it did in the immediate aftermath of the referendum. The looming deadline for the exit to occur, and the lack of defined relationship post the end March 2019 translates into a high level of ‘event’ risk for corporates and their private equity sponsors. If the date of March 2019 holds (which is by no means 100% certain), we expect there will be a flurry of activity of transactions in the making, looking to complete and avoid signing occurring from March 2019 and probably the three months following.

For more information, please contact Benoit De Benaze, Head of Private Equity at JCRA: Benoit.debenaze@jcrauk.com.

Private equity credentials

Here is a list of some of the clients we have worked with in the last quarter

Private Equity case studies

Case studies
FX deal-contingent hedging for a large PE fund
Private Equity August 2018
Case studies
Stakeholder management for syndicated LBO
Private Equity August 2018
Case studies
Interest rate hedging for a privately owned company
Private Equity June 2018

Contact us

If you need hedging or debt advice or would like to speak to the team, please get in touch.