Financials-sector company, EJF Investments (EJFI) has released an update statement:
“As the impact of COVID-19 and the responses of various authorities permeate, we continue to closely monitor all relevant markets. We continue to believe that the company’s underlying assets remain robust and are able to withstand significant stress following various financial and regulatory improvements witnessed in recent years.
Forward USD FX hedging cancelled
In light of the ongoing uncertainty and the resultant volatility of foreign exchange rates driven by the spread of COVID-19, the board and the manager of the company believe that the preservation of liquidity is essential at this time. In keeping with this, the board has resolved to cancel the company’s forward foreign exchange instruments, which were used to hedge US Dollar denominated assets into British Pounds. Replacement foreign exchange hedges may be entered into as the situation evolves. Elsewhere, the company anticipates a near-term cash inflow from one of its investments, in the ordinary course of business.
The manager will provide further updates as appropriate.”
[The pound has been sliding against the US dollar since 9 March 2020, perhaps on worries that the UK is not as well-placed as the US to cope with the current crisis. EJF’s hedge will have been working against it but it could now be affected if sterling strengthens again.]
EJFI: Update from EJF Investments