RE:RE:Major currencies vs. U.S. dollarHi, Lattice, did you get a reply email from the enquiry that you sent on the weekend? Please update 1027
Lattice wrote: sunshine. This will not wash. You have to examine the currency risk exposure during the Q1 period and not look at Monday's GBP/USD in isolation from Q1. Concordia does not have a buffer. There is no question that the declining GBP in Q1 will be a drag on AMCo's performance as 85% of their profit comes from direct sales and the UK contributes the lion share. There will also be impact through flow of Austrailian dollars and Swedish Krona. What is of most concern is the corporation's interest coverage ratio covenant. With only 20% of Concordia's debt in GBP and the other 80% in USD that leads me to believe that Concordia has over-exposed themselves in Q1. It would have been so simple for them to have mitigated their risk by hedging, IMO.
sunshine7 wrote: from G&M: "How rough? Just about every major currency has gained versus the greenback in 2016.
There is one notable exception: the British pound, which is down about 0.4 per cent as of Mondays close."
0.4% is negligible and the other currencies have gained significantly so I would have to guess that the FOREX issue raised by the shorts in one of their weekly talking points is a non-issue and that 'natural hedging' is the right decision since it costs nothing.