Hello Pips,
I hope I am not breaking any rules. I have been tasked with an exercise where I have to provide hedging recommendations for a fictional company. I have an academic knowledge of FX, myself coming from equity, so I would like to have some tips and suggestions on how I should approach the problem.
The fictional UK company’s exposure is:
Revenue base:
EUR 50 million payable annually.
Cost base:
USD 10 million payable quarterly.
JPY 1.2 billion payable semi-annually.
Remainder of costs GBP 20 million.
Debt structure:
GBP 20 million on a floating rate loan on a 3-year horizon.
GBP 5 million working capital revolver facility.
I am still looking for something other than Forwards, the imaginary company is located in the UK and I would like to know from experts if there are other possible solutions that provide more hedge.
Thanks in advance, cheers!