Variance works closely with the finance teams of our clients with the objective of providing an exhaustive and independent advice on interest rate risk management.
Real estate, private equity, renewable energy, manufacturing companies and, in general, highly capitalized organizations exposed to interest rates risk, turn to Variance for specialized advice on interest rate risk hedges using a systematic 3 step approach, which includes:
- Modeling the financial profile
- Assessing and quantifying risks
- Formalizing interest risk management policies
- Validating the accounting implications of the envisaged interest rate hedge and its compliance with IFRS9 accounting standard principles before the trade
- Choosing suitable interest rate hedging strategies
- Reviewing the hedge documentation (ISDA contracts, Draft Confirmations…)
- Negotiating the applicable bank margins for hedge execution
- Assisting the client during the execution of the transaction with its financial counterparts and enhancing its negotiation power by bringing full transparency in pricing.
- Valuation of all outstanding client hedging transactions
- Hedge Accounting implementation, providing full IFRS9 reporting for auditors, including CVA-adjusted Valuations, Hedge Effectiveness Tests, Hedging Relationship Documentation and Hedge Inefficiency Calculation.
At Variance we have developed proprietary risk analysis tools and pricing models to provide transparency and live prices for hedging products.
Our financial expertise, market experience, and analytical capabilities, coupled with a deep understanding of the client’s context and objectives, makes us an ideal partner in the pursue of optimal financial risk management decisions.