HSBC structures foreign exchange link derivative deal for Brandix

HSBC Global Markets, a unit of HSBC Group, structured a derivative instrument for Sri Lanka’s Brandix Lanka Ltd in a deal worth US$ 8.5 mn (£ 4.5 mn). HSBC Global Markets, a unit of HSBC Group, structured a derivative instrument for Sri Lanka’s Brandix Lanka Ltd in a deal worth US$ 8.5 mn (£ 4.5 mn). Brandix Lanka will hedge its exposure to rising sterling pounds or US dollar interest rates for ten years, explained Sachith Perera, Treasurer HSBC Sri Lanka.

An additional feature in the structure is that the cashflows would be net settled. “The trade is for a notional amount of £ 4.5 mn and is a significant step towards proactive risk management by a Sri Lankan corporate,” he said on Thursday.

“This foreign exchange linked derivative deal will give Brandix cover to hedge against currency fluctuations, while protecting the company’s gross profits,” he said, but declined to give further details.

Brandix is one of Sri Lanka’s top apparel exporters with an annual turnover that exceeds US$ 200 mn. The group contributes 1.4 percent to Sri Lanka’s gross domestic product, employ 17,000 workers and generate indirect employment to an equivalent number.

Brandix also provides over 50 percent of value addition locally through backward-linked operations in textiles, thread, buttons, and hangers.

Brandix is supported by over 20 manufacturing facilities in Sri Lanka, and Madagascar, as well as marketing offices in New York, Columbus, and London, and a sourcing office in Bangalore.

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