A case where the right answer was to do nothing
Sector: Private Credit – Special Situations / Distressed NPLs
Asset Class: Secured Corporate NPLs (Fast-Track Resolution Regimes – Asia)
Situation Type: Rapid monetisation strategies with repeated redeployment
Primary Issue: Misapplication of lifecycle FX structuring to short-duration exposure, introducing friction without reducing economic risk
The Situation
A private credit fund operating in fast-track Asian NPL regimes assessed whether to deploy lifecycle FX structuring for local-currency acquisitions reported in USD.
On paper, the setup resembled other cross-border private credit strategies where FX lifecycle structuring is routinely applied.
In practice, the exposure profile was fundamentally different.
FX exposure existed – but it was short, intentional, and repeatedly extinguished through monetisation and redeployment.
Why This Scenario is Common
Lifecycle FX frameworks are often triggered by currency presence rather than risk shape.
When teams see:
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Local-currency assets
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USD reporting
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Multi-jurisdiction exposure
They default to structure – even when time, not FX direction, is the binding variable.
The result is well-intentioned over-engineering.
Why It Matters
In this strategy, adding lifecycle FX structuring would have:
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Inserted artificial decision points into a speed-driven execution model
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Added hedging costs exceeding expected FX variance
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Slowed reinvestment velocity and reduced competitive hit-rates
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Created false comfort without improving realised USD outcomes
The real risk was not FX drift. It was execution drag.
Structure would have mistaken volatility for risk – and destroyed value.
How This Is Typically Addressed (and Why It Failed Here)
The standard response would be deal-level lifecycle FX structuring or conditional hedging.
The Rapid Diagnostic showed this was structurally misaligned:
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FX duration was insufficient to compound into a material P&L impact
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Local-currency balances were operational assets, not residual leakage
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FX ownership and conversion authority already sat explicitly with the CIO
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Portfolio-level controls already dominated outcomes
The correct course of action was not to intervene at the deal level.
Primary Engagement Route
Rapid Diagnostic™ – FX Duration, Ownership, and Governance Assessment
Explicit outcome: Structuring-as-a-Service™ was intentionally not recommended.
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.