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Assisting our clients in defining, quantifying and managing risks
Interest rate risk
The main objectives in managing debt are :
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optimising the cost/risk ratio of debt in a controlled environment and from a long-term perspective ;
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minimising the carrying costs (i.e. the additional cost over short-term rates) incurred by fixed-rate loans; and
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setting up a management framework based on special constraints and demands.
To achieve the objectives of minimising financing and carrying costs, our approach takes into account not just the current situation but also the projected refinancing needs over a pre-determined timeframe.
In this context, we set up strategies :
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to hedge against an increase in interest rates for companies that are holding floating-rate debt, or
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to reduce carrying costs (i.e., opportunity cost) for companies holding fixed-rate debt.
Currency risk
Companies aim mainly to lessen their exposure to exchange-rate fluctuations, in order to enhance their profitability, all in an environment of controlled risk.
To assist them in doing so, we offer structures to hedge the following risks :
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transactional risks (cash-flow hedges) incurred by projected cash flows in foreign currencies, such as revenues, expenditures, dividends, royalties, interest payments, etc.
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balance sheet risks (fair-value hedges) incurred by balance sheet items originally denominated in foreign currencies, such as loans in foreign currency, receivables or payables, cash, investments, inventories, etc.
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risks incurred through investments in a consolidated foreign entity, whose operating currency is different from the consolidation currency (financial stakes, etc.).
Commodity risk
Our clients benefit from the know-how of our team of specialists and sophisticated services aiming to:
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protect their revenues, in the case of producers (e ;g., governments, mining and oil companies), who hedge against lower prices,
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minimise their expenses, in the case of consumers (e.g., utilities, retailers, airlines), who hedge against higher prices.
In addition, through our hedging experience, we offer a commodities-management service for pension funds, and have done so quite successfully for a number of years. Our returns easily outperform the traditional benchmarks (such as the Goldman Sachs Commodity Index) with value added by both allocation and selection.
Equity-market risk
We offer a wide range of strategies to manage equity-market risk :
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to protect listed equity investments,
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to enhance the returns on these investments.
This offer is for companies having stakes in listed companies, for pension funds, investment funds and external managers.
In addition, CBR has capitalised on its people’s skills in using derivatives to manage financial risks, to set up transparent and comprehensible structured products that aim to optimise risk/return ratios, thus enhancing potential returns for our investors.
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