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Product information

Debt reduction

The objective of the 3DCM programme is to actively manage any securitised debt by taking matched positions in the currency market with a view to reducing the outstanding balance of a client’s liability. 3DCM can deliver considerable year on year savings by strategically changing the ‘effective currency denomination’ of your debt.

If the currency in which your debt is expressed reduces in value against the pound, the size of your debt is reduced accordingly.

Debt can be substantially reduced with successful trading. The above example uses Canadian Dollars to show how opportunities exist with market volatility. The shaded areas in this chart highlight the potential for considerable debt reduction.

Timing

Get the timing right and the debt reduction can be dramatic.

Over the above 1 month period an original £1,000,000 debt expressed in Australian Dollars would equate to £924,908.54 a reduction of £75,091.46. In this case the interest cost for the loan would have been £310 more than Sterling but by using a blended approach to positioning the fund, 3DCM rarely if ever puts the client in a position where they are liable to pay a rate higher than the Sterling interest rate.

Interest savings

Although with 3DCM’s unique approach you are unlikely to pay a higher rate than sterling, the above graph illustrates how significant savings can be made by using other currencies to service a debt.

At 3DCM our main objective is to reduce the debt by proactively managing the interest rate advantages to overcome the inherent risks of the inflexibility of single currency loans. As such we are continually looking to balance any interest savings with the risk of adverse currency movements. We use seven of the world’s major currencies to achieve this.