●  CDW Corp · FY 2021 

Market Risk

While certain debt exposures are managed through proactive strategies, such as implementing interest rate caps for a $1.3 billion facility, unhedged floating rates still represent a direct financial risk. The company also faces translation exposure related to international subsidiaries operating in currencies like the British pound and Canadian dollar. Crucially, disclosures lack specific quantitative measures—such as Value-at-Risk or stress testing results—and provide no information regarding commodity or equity price risks.

CDW L1 Synthesis
●  SYMBOLOGY.ONLINE l1 SYNTHESIS 

Cdw Corp Market Risk Synthesis

Market Risk Exposure Assessment: CDW Corp (2021-12-31)

Interest Rate Sensitivity

Magnitude of Exposure and Risks

The company is exposed to interest rate fluctuations due to floating rates applied to borrowings under both its senior unsecured revolving loan facility and its senior unsecured term loan facility. This represents a direct financial risk tied to changes in the broader interest rate environment.

Mitigation Strategies and Strengths

CDW Corp employs active hedging strategies. Specifically, it has implemented interest rate caps for the senior unsecured term loan facility to stabilize interest expense. As of December 31, 2021, this cap agreement holds a notional amount of $1.3 billion. This demonstrates a proactive approach to managing specific debt exposure.

Weaknesses

While hedging is in place for the term loan, the company remains fully exposed to floating rate fluctuations on its senior unsecured revolving loan facility, indicating an unhedged portion of its interest rate risk.

Foreign Currency Exposure

Currencies and Risk Type

The primary foreign currencies involved are the British pound (GBP) and the Canadian dollar (CAD). The main exposure identified is translation risk, as international operating subsidiaries use local currencies as their functional currency, meaning results must be translated upon consolidation.

Magnitude of Exposure and Mitigation

The direct effect of foreign currency fluctuations on the company’s results of operations has been noted as non-material because the majority of its overall results are denominated in US dollars. This structure limits the immediate impact of exchange rate volatility. No specific hedging instruments for transaction risk were disclosed, but the current translation risk exposure is deemed low magnitude.

Commodity Price Risk

The provided market risk disclosures do not contain any information regarding commodity price risks, key commodities involved, or associated contract structures.

Equity Price Risk

The provided market risk disclosures do not contain any information detailing investment portfolio exposures or resulting mark-to-market impacts related to equity prices.

Quantitative Measures and Stress Testing

No specific quantitative measures were disclosed in the filing excerpt. This includes a lack of mention regarding Value-at-Risk (VaR) calculations, detailed sensitivity tables for various risk factors, or results from formal stress testing scenarios.