Hedging in acquisition finance

Borrowers often hedge (or are required to hedge by senior lenders) against the following risks in the context of a lending transaction:

• • interest rate risk by entering into an interest rate swap or other derivative transaction of similar effect;
• • exchange rate risk by entering into a currency swap or other derivative transaction of similar effect; and
• • where relevant commodity price risk by entering into a commodity swap or other derivative transaction of similar effect.

This guidance note explains the key documentation issues to consider when hedging risks in a lending context.

See Hedging in acquisition finance.