designated financial instrument


X

xanax

Hello everybody,

I'm a student writing a master's thesis. I came across a very intresting
text, but there is one thing i do not understand. I hope i found the right
group of people to ask my question.

What is a "designated financial instrument", what makes a financial
intrument "designated"??
If this question could be answered by someone here, that would be much
appreciated.

Thx in advance

Simon

PS: Does anybody know a dutch or french wording for it? (i'm writing in
dutch)
 
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B

Bob

xanax said:
Hello everybody,

I'm a student writing a master's thesis. I came across a very intresting
text, but there is one thing i do not understand. I hope i found the right
group of people to ask my question.

What is a "designated financial instrument", what makes a financial
intrument "designated"??
If this question could be answered by someone here, that would be much
appreciated.

Thx in advance

Simon

PS: Does anybody know a dutch or french wording for it? (i'm writing in
dutch)
sorry, I don't know dutch but the phrase "designated financial instrument"
could mean different things as 'designate' means for a specifc purpose.
 
K

Ken Russell

A Google search turns up many hits, but none define what it is.

Ken Russell
Remove hat to reply by e-mail
(e-mail address removed)

| Hello everybody,
|
| I'm a student writing a master's thesis. I came across a very intresting
| text, but there is one thing i do not understand. I hope i found the right
| group of people to ask my question.
|
| What is a "designated financial instrument", what makes a financial
| intrument "designated"??
| If this question could be answered by someone here, that would be much
| appreciated.
|
| Thx in advance
|
| Simon
|
| PS: Does anybody know a dutch or french wording for it? (i'm writing in
| dutch)
|
|
|
 
J

Jeremy Westhead

If you are in Belgium I suspect you are looking at IFRS or similar. It is
therefore likely that a designated financial instrument is a financial
instrument which has been designated from inception as a hedging instrument.

In order to do this you also need a hedged item.

E.G.

A company ("Issuer") issues a ?100m 10 year floating rate bond at EURIBOR
+150bp ("the Bond") (as this is what the market expect / are willing to
invest in).

However Issuer does not want to be exposed to floating rate debt and
therefore takes out a swap ("the Swap") (?100m notional prinicipal, 10 year
tenor) swapping floating for fixed, i.e. pay fixed, receive floating, such
that its net exposure under both the Swap and the Bond is fixed rate ?100m
10 year.

In this scenario the Swap would be a "designated financial instrument" and a
"hedging instrument". The Bond would be the "hedged item".

It would be useful to know the context to confirm if my analysis is correct.
 
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T

Troy Steadman

Jeremy Westhead said:
However Issuer does not want to be exposed to floating rate debt and
therefore takes out a swap ("the Swap") (?100m notional prinicipal, 10 year
tenor) swapping floating for fixed, i.e. pay fixed, receive floating, such
that its net exposure under both the Swap and the Bond is fixed rate ?100m
10 year.
Okay that the Dutch version, can anyone translate it into French?
 
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