We leverage our decades of experience to simplify the complex process of structuring and executing derivatives so you can confidently enter negotiations with your bank counterparties. You will be educated and informed as we provide independent structuring advice, review and negotiation of governing and regulatory documents, and live pricing verification.
Details
The derivatives market is one of the largest, most highly complex markets in the world. While regulations are helping to increase transparency, interest rate derivatives are still traded in the OTC market and many aspects of their execution are opaque. KPM Financial works closely with you to ensure you are well informed throughout the entire process of executing a derivative solution.
Why Should Banks Hold All The Cards?
KPM believes you should have the same capabilities as the banks with whom you transact. As such, KPM provides:
Education
Every client has its own, unique capital structure and, therefore, needs a custom-tailored hedging program. KPM will provide the education desired and/or required to ensure that your board members, management, and staff have the desired level of understanding of the mechanics, risks, and benefits associated with interest rate hedging solutions.
Counterparty Selection
Lenders and underwriters will often lead you to believe that they are the only option to provide swaps and other hedging tools. While this is often the case, KPM may be able to introduce other counterparties either through negotiation or a competitive bid. By helping place swaps, we can often obtain better covenants, more flexible documents and ultimately better pricing.
Development and Structuring
There is a seemingly infinite number of possible hedging structures that you may implement when taking into account notional, effective date, maturity, amortization, periodicity, day count, security, etc. KPM will assist in the development and structuring of interest rate risk management strategies incorporating your objectives, constraints, and risk tolerances.
Document Negotiation
As with structuring, documentation of different hedging structures can take on many forms. KPM will assist in drafting and negotiating the appropriate documentation including, but not limited to, Dodd-Frank mandated disclosures and elections, authorizing resolutions, swap policies, hedge identification/qualification letters, Schedules to the ISDA Master Agreement, Credit Support Annex, and confirmations.
Pricing Verification
KPM has invested in state-of-the-art technology to assist you in pricing and analyzing hedging solutions. KPM identifies exactly what banks are making and opines on the appropriateness of these bank “spreads”.
By using live market data in combination with market-tested and proprietary models, KPM can price any relevant solution within the interest rate derivatives market including (but not limited to):
Swaps
European and Bermudan Swaptions (including cancellable and puttable swaps)
Caps, Floor, and Collars
Knock-outs and Knock-ins
Basis Swaps
Constant Maturity Swaps