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River hydro project FX hedging
Case studies

River hydro project FX hedging

Background
  • A Renewable Energy Investment fund investing in a 44MW run of river hydro project in Uganda required an FX hedge, EURUSD to match the full term of the PPA, 20 years
  • The hedge was to be structured with maximum flexibility for early termination without any collateral obligations
  • Cost was a significant requirement, especially the deferral of cost beyond COD
  • The Investment Fund required a staggered combination of forward strikes, ATM and OTM
Our Approach

JCRA identified potential hedging counterparties with appetite for very long tenor FX hedging

JCRA, together with the counterparties and the fund, designed an appropriate bespoke FX hedging instrument which:

  • Offered maximum flexibility with cancellability
  • Provided deferred payment terms
  • Did not require collateral or credit lines

JCRA auctioned the hedge to the most competitive hedge provider

Benefits
  • The sponsor was able to meet its investment mandate
  • Maximum flexibility was achieved, allowing for refinancing and early termination
  • JCRA worked with the selected hedge providers to achieve an FX solution that was highly bespoke and tailored to the sponsor’s specific needs
  • JCRA ensured an efficient hedge execution at a price acceptable to the sponsor
 

More case studies

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Hospital PFI refinancing
Project Finance & Infrastructure August 2019
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Infrastructure Fund: Refinancing risks and the potential effect on IRR
Project Finance & Infrastructure April 2019
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Hedging advice for a Canadian Infrastructure Sponsor
Project Finance & Infrastructure October 2018

Contact us

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