Derivatives and other financial instruments

UBB AD Treasury Department effects and offers to its clients: FX Swap IR Swap FX Forward FX Options Other derivatives and structured products

Financial Instrument Types

FX Swap  
Swap operations is an exchange of amounts in one currency for another currency with the agreement for their reverse exchange on a certain future date at a pre-negotiated FX rate.
Swap allows for optimum current liquidity management in the currency, needed by the client, as well as hedging of foreign currency exposures, arising from the different currencies of your business’s cashflows.

IR Swap
Interest Rate Swap is an instrument for hedging interest rate risk. It represents an agreement between UBB and a client to exchange interest rate payments on a pre-negotiated principal amount, where one of the interest rates is a fixed percentage, while the other is based on a floating rate, linked to the value of a certain interest rate index.

FX Forward
FX Forward is an agreement between UBB and a client, pursuant to which currencies are purchased and sold at prices agreed today, but with delivery on a certain future date at a so-called forward rate. This is a legally binding agreement for both UBB and its client - without the need to transfer funds prior to the agreed future date.

Advantages:
Eliminates the uncertainty resulting from exchange rates’ fluctuations;
Facilitates precise budgeting; 
Enables the company to concentrate on its core business activity and not on day-to-day fluctuations of exchange rates;
No additional costs’ burden on the client.

Shortcomings:
FX forwards involve fixed commitments on the part of clients, excluding the possibility to generate FX gains in case on the value date the market rate turns out more favourable than the agreed forward rate.

FX Options
The buyer of an FX option has the right, but not the obligation to buy/sell the underlying currency at an exchange rate, agreed in advance (strike price) on a determined future date (European-type option) or on any day till the occurrence of the respective future date (American-type option).

Through the purchase of an FX option the buyer minimizes his/her/its potential losses upon unfavorable fluctuation of the FX rate up to the amount of the paid premium (the price of the option), while at the same time preserves the possibility to profit from favorable FX rate fluctuations.

Advantages - risk limited up to the amount of the paid premium, fixed maximum future exchange rates, respectively payments, unlimited profit-generation potential.

Shortcomings - in order to effect this strategy the client has to pay the option premium – the so-called option price.

Other derivatives and structured products  

Other
Treasury Department provides to its clients a free-of-charge daily bulletin with updated information about the local and international money, FX and capital markets. The bulletin is available each business day
at www.ubb.bg/treasury_bulletin

UBB AD reserves itself the right to amend the terms of the above products and services in accordance with the market conditions, as well as to negotiate other terms on any specific transaction.

Parameters

The minimum amount for the above deals and products varies depending on the instrument.
Please, inform yourself of EMIR, the new European regulatory framework, through Useful Documents Section.

Contact us

FX swap - For additional details, please, contact us at +35928112440, +35928112442 and +35928112439, +35928112445 or at stefanov_va at ubb.bg, mays_k at ubb.bg, krasteva_b at ubb.bg, yordanov_t at ubb.bg.

IR Swap  - For additional details, please, contact us at +35928112436 and +35928112441.

FX forward and FX options  -  For additional details, please, contact us at +35928112439, +35928112442, +35928112445, +35928112440 or at  krasteva_b@ubb.bg, mays_k at ubb.bg, yordanov_t at ubb.bg, stefanov_va at ubb.bg.

Other derivatives and structured products  - To discuss the multiple options for hedging, speculation and/or finding the appropriate solution for the financial needs of your business, please, contact us at  +35928112442, +35928112439, +35928112445 and +35928112440 or at mays_k at ubb.bg, krasteva_b at ubb.bg, yordanov_t at ubb.bg and stefanov_va at ubb.bg.

Useful Documents
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