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GLOBAL MACRO & CURRENCY MANAGEMENT

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Synthetic Debt Programme

Our Synthetic Multi-Currency Debt Management Programme has the same broad underlying principles, methodologies and capabilities that ECU offers via the "physical” Multi-Currency Debt Management Programme.

This alternative "synthetic” programme essentially replicates the performance of the traditional "physical” programme, by employing the same currency strategies adopted in respect of our "physical programme”, except that these are operated by engaging in FX forwards or "rolling spot” transactions.

The principal difference is that with the "physical” programme, physical delivery takes place and the client’s loan facility is actually redenominated into the new currency(ies) on the value date of the currency switch implemented and, thereafter, the client pays interest in accordance with the borrowing rates applicable to those currencies borrowed. By contrast, the "synthetic” programme simply trades the desired debt currencies, short against the investor’s Base Currency (typically GBP for UK property borrowers) via FX forwards or rolling spot transactions. With FX forwards or rolling spot transactions, any interest rate differential between the client’s Base Currency and those currencies traded short against the client’s Base Currency will be broadly reflected in the FX prices obtained. In effect, the cash flow benefits/costs on the "physical” debt programme are converted into a capital gain/loss consideration under the "synthetic” programme.

Please note that unlike the physical Multi-Currency Debt Management Programme, the Synthetic Debt Programme is a regulated activity.

SIPP Investment Status

ECU’s Synthetic Multi-Currency Debt Management Programme is a permitted SIPP investment with a number of SIPP providers, although some restrictions may apply. Clients are advised to check with their SIPP provider. Please note that ECU does not provide any pension related investment advice whatsoever, thus prospective clients considering an investment in a Managed Currency Account via their SIPP should be separately and independently advised by their financial adviser.

Further Information

 Click here to download the full Synthetic Debt Management Programme Guide.

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