When FX risk becomes economically real before anyone owns it
Sector: Private Credit – Local-Currency Direct Lending
Asset Class: Sponsor-Backed & Direct Lending (IDR/VND/THB/PHP/AUD Pricing)
Situation Type: Local-currency commitments with delayed funding certainty (repeat origination)
Primary Issue: FX exposure becomes economically binding at commitment but remains operationally unowned until closing, creating systematic USD entry drift.
The Situation
Deals are priced and approved in the local currency but reported and evaluated in USD.
FX exposure becomes economically binding at commitment, yet remains operationally unowned until closing.
Why This Scenario is Common
FX is treated as a “funding-date problem”. Investment teams focus on credit approval, treasury waits for certainty, and governance assumes FX can be handled later.
In reality, pricing becomes binding weeks or months earlier.
Why It Matters
Each deal’s FX drift looks immaterial in isolation.
Repeated across origination cycles, it creates systematic USD entry erosion, inconsistent realised IRRs, and post-hoc IC explanations that replace decision control.
How This Is Typically Addressed
FX is reviewed late, hedging decisions are compressed into execution windows, and slippage is rationalised as market noise rather than a process failure.
Primary Engagement Route
Derivative Portfolio Review™ – Cross-Border Acquisition FX Exposure
Read the IC Brief → (2-page decision summary)
Full structural narrative shared selectively on request.
Illustrative scenario for discussion purposes only. Not a transaction summary or client-specific case study.