Using a Net Investment hedge strategy to boost income has been around for decades, but the ultra-low interest rate environment in Europe combined with the new rules under ASU 2017-12 has renewed curiosity in this approach.
Do you need to implement a cash flow hedge program quickly — either due to urgent management directives, Board member mandates, or competitive pressures? It happens all the time, leaving treasurers and decision-makers to scramble to come up with the right solution.
A common misconception is that if you have a foreign currency transaction, you can simply hedge it and apply special hedge accounting.
Companies that need to refinance their debt do not have to wait until they refinance to lock in their interest rate on new issuances.
In March, the FASB issued ASU 2020-04 on the “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.”
There has been some confusion around the ASC 815 rules set regarding effectiveness assessments and probability assessments.
In this video, Ruth Hardie, senior director of client services, provides an overview of what you can expect from interest rate swaps given the current large drop in rates.
With interest rates near all-time lows, many companies are starting to worry about the effectiveness of their current hedges when they aren’t perfectly matched to the underlying debt, while others are looking to lock in the favorable rates by entering into hedges or extending the length and/or amount of hedge coverage for existing hedges.
Under stable market conditions, most corporate foreign currency hedgers have a “set it and forget it” hedge strategy. Whether it’s cash flow or net investment hedging, once the hedges are in place, the majority of companies hold onto their derivatives through maturity. It’s an understandable practice as the best hedgers usually deliver currency against their hedges. This preserves the hedge rate in margin and converts cash at the same hedge rate.
On Sunday afternoon, the Federal Open Market Committee (FOMC) reduced its target rate by 100bps to a range of 0-0.25%.
At Hedge Trackers, we are frequently asked to help identify “hedgeable” cash flow exposures under ASC 815 for our clients.
Many companies protect margins from changes in foreign currency rates by using special Cash Flow hedge accounting strategies.
Many companies will be affected by a global pandemic (should it come to fruition)—and a number are already being affected just by the containment efforts.
You’ve spent hours and hours developing a hedging strategy, identifying exposures, forecasting, and verifying hedge accounting, but your efforts shouldn’t stop there. To inform management the job is done, and done well, you need to go to the next level: performance reporting.
On March 3, 2020, the Federal Open Market Committee (FOMC) made an emergency 50bp interest rate cut in response to the Coronavirus’ impact on the U.S. economy.