Centrus acted as GBP and EUR interest rate hedging advisor to NSMP on the company’s successful refinancing

Transaction overview

North Sea Miodstream Partners (NSMP) owns and develops large-scale midstream oil and gas assets in and around the North Sea. The company refinanced its existing bank financing with a combination of bank and institutional funding, in GBP and EUR currencies. With a backdrop of significant volatility, the process required careful interest rate risk management of both incumbent hedge positions, as well the new hedging structures to be put in place. Early-stage risk management resulted in locking in favourable swap rates, providing cashflow certainty and a smooth hedging process.

Centrus’ role

Centrus played a key role in managing the hedging process, ensuring an optimal pre-hedging strategy and execution. This included:

• Pre-Hedging Analysis: Conducting a detailed assessment of various pre-hedging options, including opportunities to recycle existing in-the-money hedging into the post.
• Hedge Execution Coordination: Selecting and liaising with the hedge coordinator to implement the most effective pre-hedging structure, incorporating novations and reprofilings.
• Hedging RfP Management: Running an efficient request-for-proposal (RfP) process to bookbuild a hedging programme at attractive levels.
• Bank Negotiations: Negotiating swap charges and determining final bank allocations to optimise execution.
• Legal & Commercial Review: Collaborating with legal teams to assess the commercial aspects of all pre- and post-trade hedge documentation.

Outcomes

The pre-hedging interest rate swap strategy resulted in the company de-risking the refinancing between signing and closing, all with a backdrop of significant market volatility. Locked in rates across both EUR and GBP bank debt tranches, providing cost of funding certainty for the next 7 years. Optimal risk management whilst providing shareholder value through careful consideration of existing hedgin. Centrus ensured NSMP achieved best value for its client, whilst ensuring a transparent and competitive process with hedge counterparties

“Centrus supported us in developing a dynamic hedging strategy, helping us manage risk effectively amid market volatility. The hedging approach secured competitive rates and provided certainty via a smooth implementation process. We look forward to working with Centrus on future transactions.“

Richard Ozsanlav, CFO – NSMP

“We are pleased to have supported NSMP on this significant refinancing. By collaborating closely with NSMP, we developed an effective hedging strategy that provided certainty during the refinancing and for the years ahead, allowing the business to focus on its commercial operations.“

Barney Harris, Assistant Director – Centrus

For more information, please contact Barney Harris, Assistant Director – Centrus

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