RAT 0.00% 0.9¢ rubicon america trust

I'm concerned that distribution is likely to fall after present...

  1. 64 Posts.
    I'm concerned that distribution is likely to fall after present hedging lapses (assuming present A$/US$ exchange rate)

    From RAT Half Year Results June 2007 …

    FX hedging has significantly protected unitholders from the rapidly appreciating A$:
    – 100% of expected foreign income hedged for 6-8 years at US$0.69
    (This is what I want to know - what happens afterwards?
    See my guess calculation below)
    – 100% of foreign equity hedged against A$ rising above US$0.87 (versus current rate of US$0.86)(1); 96% of
    foreign equity already fully hedged
    – Estimated saving of A$28.9 million or 7.1 cents per unit assuming no capital hedging in place

    (pg 6)


    Q – What happens after the 6-8 year period? Would the distribution change according to the current exchange rate. Eg assuming present exchange rate of Aus$1 = US$0.87c is maintained, and hedged distribution would be 11.4c, would distribution after hedging become 11.4c * 69c/88c = 8.9c?
    (still quite respectable given current at sp of 56.5c)

    Anything else we should know about the currency hedging?
 
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