What we do
HedgeNX enables Private Credit providers to include simple but effective interest rate hedges directly within their loans. This capability increases the quantity and quality of borrower-level interest rate hedging across their portfolios, reducing default risk in rising interest rate scenarios.
How we do it
HedgeNX substantially reduces indirect interest rate risk in Private Credit loan portfolios by encouraging and actively facilitating prudent borrower-level hedging strategies. Our innovative approach eliminates up-front hedging costs and removes nearly every administrative burden of the hedging transaction itself for borrower and lender alike. It also vastly increases a lending team’s control and visibility over interest rate risk decisions and implications from term sheet to loan repayment.
HedgeNX is a global solution that can be implemented for any portfolio of floating-rate senior, mezzanine and/or PIK loans in most currencies and major floating-rate indices. Within the broader Private Credit sector, it is particularly compelling for Real Estate Debt, Infrastructure Debt, and corporate Direct Lending funds.
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By embedding a tailored interest rate cap into a standard floating-rate loan, our solution effectively broadens a lender’s product suite to include capped-rate loans. The only change to the loan is the addition of a comprehensive, lender-specific Hedge Annex detailing the full commercial terms of the agreed cap and the borrower’s repayment schedule.
Neither party to a capped-rate loan bears the up-front costs or the administrative burdens of managing a separate derivative transaction with a third-party bank.
Instead, the lender relies on HedgeNX to transact, finance, document, and manage the payment flows of the embedded cap during its term. The borrower’s sole focus is the loan, and its sole contact is with the lender.
Why collaborate with HedgeNX?
Redefining interest rate hedging as a lender-led process is a bold step, but one that is consistent with the Private Credit sector’s focus on flexible capital solutions.
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Instead of relying on banks or advisers for hedge strategy guidance, HedgeNX gives lending teams access to a dedicated SaaS module for generating pre-formatted indications and documents as well as managing the trade authorization processes.
Instead of borrowers being tempted to minimize hedging costs because they are funded at their cost of equity, our solution funds them at the cost of debt. This leads to more prudent borrower hedging decisions. And the funding is flexible; it can be provided by the lender, a subset of its investors or an approved third party.
Instead of relying on the borrower to negotiate the economic terms of a one-off hedge with a bank it selects, we manage a competitive execution process between creditworthy banks eager for repeat business within the HedgeNX bank panel.
Instead of borrowers having access to the hedge during the loan term, we maintain custody and follow only lender instructions and formal service terms for any agreed modifications or termination actions.
Lender-friendly aspects
- Higher incidence of elective hedging by borrowers.
- Higher likelihood that elective hedging will be robust.
- Less resistance to the imposition of hedging requirements.
- Negligible post-closing delay to hedge implementation.
- Greater visibility of hedging-related data across the portfolio.
- Net reduction of portfolio risk without direct costs.
- Option to earn extra margin by participating in hedge cost financing.
- Option to invite select LPs to participate in hedge cost financing.
- Flexibility to implement or modify capped-rate terms at any point during a loan.
Borrower-friendly aspects
- No additional equity outlay for hedging costs.
- No administrative burden of selecting, onboarding with, and negotiating derivatives documentation and pricing with a hedging bank.
- Certainty of hedge cost financing approval.
- Transparent credit charge calculations with fair methodology.
- Competitive sourcing process for the underlying hedge transaction.
- Flexibility to implement or modify capped-rate terms at any point during a loan.
The Team
The leadership team launched HedgeNX with a vision to improve lending markets by making the cost of debt more predictable for businesses and asset owners around the world that rely on Private Credit.
The team benefit from deep expertise across a range of fund management, banking and advisory roles mostly focused on the Private Capital sector.
They also acknowledge the critical role of deep, enduring partnerships with industry-leading service providers and financial institutions that have come before HedgeNX.
HedgeNX Group
The four HedgeNX entities comprising the group are based in Jersey with corporate and fund services provided by Altum Trustees Limited, which is regulated and licensed by the Jersey Financial Services Commission.
HedgeNX Services Ltd.
Responsible for all client-facing services and partner relationships.
HedgeNX Trading Ltd.
Responsible for derivative transaction management, custody and payment operations.
The HedgeNX [#] L.P. fund series
Responsible for hedge cost financing operations.
HedgeNX Advisers Ltd.
General Partner to the HedgeNX funds.