Antonio is pushing for an innovative strategy: participation swap

Antonio, 56, manages three 10 MW solar facilities. As often happens, he starts the day with a meeting: “Good morning, Antonio, please have a seat.” This is how he is greeted by Pablo and Jaime, the company’s CEO and CFO respectively. They want to see Antonio to talk about a new strategy he has proposed.

Based on recorded spot prices for the month of February 2017,  Antonio has decided to hedge for the rest of the year using a participation swap that will allow him a guaranteed minimum price of production, in exchange for a percentage of the potential rise in prices that Antonio foresees for the market.

“Antonio, you've been with us for many years and we all trust your professional credentials,” Pablo starts. “But we've never used hedging and we just don't know what it might involve.” Jaime goes on, “To evaluate your proposal we need to be able to count on a sound and highly literate counterparty. Without this kind of support, we can’t really consider your solution.” Antonio - a historically good counterparty to Enel Global Energy and Commodity Management and Chief Pricing Officer - asks for help from our Team, who immediately provides him with assistance. Our experts see they’re dealing with a very sensitive situation: they need to study the company and its high-level executives in order to help Antonio to obtain his complex goal.

After four weeks of intensive work, our Team manages to explain to Pablo and Jaime the features of the strategy proposed by Antonio: hedging using a participation swap / profit sharing.

Find more about the product Power Structured Products in Italy or Power Structured Products in Spain.