Hong Kong-based Gold Peak Industries (Holdings), a multinational involved in industrial investments, technology and batteries, is considering entering interest-rate swaps for the first time to hedge interest-rate exposure on its HKD1 billion (USD128 million) floating-rate loan portfolio, of which the majority is U.S. dollar LIBOR-based. "We're considering proposals," said Barry Ho, manager in the finance department.
The firm is looking at entering the swaps because it thinks there will be a recovery in the U.S. by the middle of next year, which will likely result in higher interest-rates, according to Louis Wong, financial controller. He continued that the firm is looking to lock in low-rates, entering three and five-year interest-rate swaps to match the maturity of the outstanding loans, in a likely size totaling USD100 million (notional). Wong continued that Gold Peak is in discussions with its primary bankers, HSBC, Citibank and Standard Chartered Bank. Pricing is the most important factor in choosing a counterparty, he added. Spokesmen at HSBC and Citibank in Hong Kong did not return calls. A spokeswoman at Standard Chartered in Hong Kong declined comment.
Gold Peak's Ho said the company has used currency options and forwards for hedging U.S. dollar exposure but declined to elaborate on the transactions or counterparties. The company has over HKD3.72 billion (USD477 million) in assets.