The clients of Noah's Rule are generally organisations with significant financial and/or commodity market risk. They are organisations that require Strategic Advice or Expert Opinion from professionals who have:
- Direct exposure to financial markets;
- A detailed understanding of construction, pricing and behaviour of market products;
- A detailed understanding of key drivers of financial intermediaries;
- Extensive experience in trading and pricing; and,
- Extensive experience working with corporations to tailor hedging solutions.
Clients of Noah's Rule can draw on the same skills and tools that exist within the banks/hedge providers they deal with allowing them to develop independent views on the suitability of risk management solutions.
We commit to work with our clients to really understand what their strategic objectives are and to ensure that hedging policies developed: are the best possible combination of what is available in the market; the most appropriate in the prevailing market environment; and, have the flexibility to adjust to changing market and corporate circumstances.
Our advice is developed from the perspective that knowing what our clients are trying to achieve and knowing what is available to them; what range of approaches would we take if their decisions were ours. Clearly this relies on us being able to understand the issues sufficiently and to be involved in the strategic planning processes around these issues.
Clients draw comfort from the fact that our fees are not dependent on product choice or hedge volumes. This is substantially different from the potential earning differential on their products for transactional counterparties. Importantly however we also respect that supply/banking relationships are crucial to clients and as such our preferred positioning is alongside our clients or right behind them, never replacing them as the key contact point with their suppliers/hedge providers.
Strategic Market Risk Review
Our strategic review process is designed to arrive at a clear understanding of:
- the risks a company faces;
- the market to which it is exposed;
- the sensitivity of the business to those market risks;
- the tools at the company's disposal to manage those risks; and,
- how the structured management of that risk can support other strategic and financial objectives.
Product Familiarisation and Strategy Sessions
At Noah's Rule we see it as crucial that those charged with the responsibility of developing and implementing Market Risk/Hedging Policy, fully understand the company's situation as it relates to its' market risks and are fully aware of the products available to manage those risks and their associated pitfalls.
The Product Familiarisation and Strategy Sessions are tailored full or half day sessions involving key managers and stakeholders designed to achieve common understanding of the issues facing the company and the alternatives available.
The first session is spent familiarising participants with:
- the machinations of the relevant markets;
- the hedging products available;
- how hedging products are priced; and,
- how the intermediaries manage the risk associated with the provision of hedging services.
The second session is spent focusing on:
- the company's situation relative to its market risks; and,
- how the various products might be applied to achieve strategic objectives.
Further training is provided on a needs basis.
Formulation of a Risk Management/Hedging Policy
We do not believe there is a 'one size fits all' Policy. Once a clear understanding of the company's situation has been achieved through a strategic analysis, a dynamic but structured Risk Management/Hedge Policy, unique to the company's requirements can be developed.
This is a key element of the Risk Management process for it is the Market Risk/Hedging Policy that provides the framework within which risk management strategy can operate; and, is the basis around which it can be modified and reviewed over time as market and corporate circumstances change.
As financing options become increasingly complex and lenders' appetite for risk increasingly variable, the ability for a company to assess the real cost of funding and practical impact of facility covenants on its business becomes increasingly difficult and time consuming. At Noah's Rule we believe it is critical to work with our clients to fully understand their corporate objectives so that we can ensure that any proposed debt financing will deliver optimum shareholder value and satisfy business strategies. Our debt advisory team is ideally placed to assist our clients navigate their way through the debt raising process with the objective of delivering prudent debt levels with terms and conditions that are fully costed and understood and deliver best value to all stakeholders.
Our debt advisory team has proven experience, extensive market contacts and will always deliver independent objective advice. The team consists of professional senior ex bankers experienced in commercial, project and corporate debt raising and structuring. We believe that our intimate understanding of the deal driven nature of lenders, their internal hurdle rates and their credit procedures, assists us negotiate improved terms for clients and to drive transactions through to financial close as expeditiously as possible. The debt advisory team's effectiveness is further strengthened by the support of Noah's Rule unique risk management background enabling us to fully understand and cost lender's requirements for mandatory hedging and more importantly assist in the negotiation of hedging that meets both bankers requirements and clients strategic objectives.
Whether you are seeking to optimise debt amounts, minimise funding costs or retain maximum exposure to commodity price upside, Noah's Rule can advise on all, or part, of the funding process from prioritising your Board's funding objectives through to conducting a competitive tender for finance facilities. Our services include a review of your financial model, preparation of an information memorandum, liaison with lenders, analysis of terms and conditions, negotiation of term sheets and financing documentation and assistance in satisfying conditions precedent and achieving financial close.
Assistance with Negotiation and Execution of Financier Required Hedging/Assessment of Hedging Structures
Given the background of our team we are ideally placed to assist our clients in the negotiation and refinement of the structure and pricing of the financing related to hedging products and their associated terms and conditions. We are also able to assess the relative merits of different structures and ensure appropriate market pricing and application of margins.
Our active risk advisory necessitate we maintain the market knowledge and pricing tools necessary to assess the appropriateness of spot, option, forward and interest rate swap pricing and related margins by counterparties as and when that service is required by our clients.
Through our Bloomberg service we have access to all necessary real-time pricing, along with access to extensive historical pricing data. In addition to the forward and option pricing functionality found within Bloomberg, we have direct price links from Bloomberg to a range of in-house pricing and evaluation tools. We maintain very good relationships with a number of dealers across a range of markets in the dealing rooms of major banks here and overseas, who also provide us with additional market intelligence on pricing, products and margins. Our IT platform allows internet access to our systems allowing us to remotely provide pricing and evaluation services to clients at any time or from almost any location.
After hedging is established we can provide valuation services on existing positions for inclusion in reporting and/or assist in the acquisition of the appropriate level of in-house or out-sourced back office services/systems as required.
External Communication of Hedging Strategy to Stakeholders
One of the most common difficulties that companies face in relation to hedging is the external perception of the impact on future profitability and market leverage. We believe this is often a consequence of a failure to communicate the risks within the business alongside the broader corporate strategy and therefore the benefits and modified risks that result from the company's chosen hedging strategy.
Our process resolves many of the common issues by involving and educating all key stakeholders. Through this process they become aware of the potential of the risks and the trade offs required to achieve the benefits hedging delivers.
Strongly formed policies and their ability to be incorporated within the broader corporate communication strategy are an outcome of our process. In addition we can provide assistance in the drafting of all external communications in relation to hedging to ensure it is both accurate and appropriate.
Remedial and Forensic assignments including Expert Opinions
Unfortunately due to poor risk management practices in relation to financial markets and/or inappropriate application of hedge products, some companies find themselves facing significant financial losses, or, with a hedge book that requires remedial solutions.
Noah's Rule is uniquely placed to provide expert opinion in such circumstances, including negotiation and execution of hedge restructures and in extreme cases forensic investigation.
Ongoing Client Support
It is in the interest of our clients that we provide ongoing support at the strategic level, assisting them to maintain hedging within the defined policy and to make appropriate policy modifications in line with any changes in internal or external circumstances. This review and support can occur on a predetermined cycle, or as needed. With current engagements ranging from ad-hoc advice, to regular monitoring of policy levels and ex-officio roles on client hedging committees.