What We Do
As an independent advisory firm, First Tryon maintains an arm’s length relationship with investment banks, commercial banks, and all other derivative counterparties. We do not act in a principal or broker-dealer capacity for any derivative advisory clients. This practice helps to assure completely objective advice for our clients.
Our professionals have worked on billions of dollars of financings involving the use of derivatives. Many of those assignments have involved restructuring, covenant negotiations or other challenges with existing transactions. First Tryon has experienced consistent success in helping our clients to confront the challenge of refinancing debt hedged by a swap. Because of our experience with these engagements, we have in-depth knowledge of the market for bank novation, assumption fees and related structuring issues. Our experience, technology and access to market resources helps to ensure highly competitive pricing for our clients’ transactions.
Our professionals have considerable experience analyzing, valuing, structuring, bidding and executing transactions involving many types of derivative products. Given the general lack of transparency in the derivatives market and the complexity and risks associated with derivative-based transactions, we strive to guide our clients through a deliberate and thorough process designed to ensure that the client is making fully informed decisions with an understanding and appreciation for all the risks and idiosyncrasies of the contemplated transaction prior to execution.
In certain situations, a competitive solicitation may not be appropriate. In those cases, we seek to negotiate a reasonable spread to mid-market with consideration for fair market pricing for each component of our clients’ all-in rate (including execution and legal costs, credit reserves, and the counterparty’s gross profit). Mid-market pricing is verified at the time of the trade or during any counterparty negotiations that we conduct on behalf of our clients. We do not rely on end of day data or other stale data streams for use in any of our derivative pricing engagements. First Tryon maintains a database of interest rate swap transactions containing spread to mid-market information for numerous swap counterparties and past transactions. We utilize that information to enhance the outcome of swap negotiations conducted on behalf of our clients. In single party negotiations, we work hard to ensure that all transaction structuring and documentation is completed well in advance of receiving definitive pricing from our clients’ counterparties. This helps to eliminate any last-minute surprises while providing for the maximum number of rate verifications and independent valuations during the course of the negotiation.
We strongly prefer competitive bidding of derivatives transactions rather than negotiating terms with a predetermined financial institution. This is especially true for our highly rated clients. We conduct a thorough competitive bidding process with all major business terms established in advance and encourage all appropriate potential counterparties to participate. In our competitive solicitations, awards are typically made within minutes of receiving bids and no subsequent negotiations of terms are permitted. In general, we find that most of the relevant financial institutions favor this approach and appreciate the level playing field and swift turnaround time.