By Gabriella, Johanna & Anna
Interns during a pandemic
We are the fortunate ones to be this year’s summer interns at Nordea Markets in Stockholm – and we would like to welcome you to our first blog post about our internship here.
In view of the pandemic circumstances, we are very happy and thankful to even have the possibility to pursue the internship at Nordea Markets. Even though many Nordea employees are still working remotely from home or having ‘staycation’, there is plenty of action where we are; at the dynamic Market’s trading floor where everything is up-and-running at full speed.
Finally set free – and repeatedly amazed
Starting off our internship, we did however, spend our time in a designated conference room due to Coronavirus restrictions. But thankfully, we have been set free and are now allowed to sit at the Markets trading floor as more and more people leave for vacation. And we just couldn’t be more excited to be here!
So far, we are amazed by the structure of the internship and of how much time and effort the seniors are putting in to give us such a meaningful and fun experience.
For those of you who aren’t aware of the structure of this internship, it is a rotational program on various desks throughout these eight weeks of summer.
Each week we are focusing on a new desk and are given a relevant case where we get to apply our newly gained knowledge, finishing up with presenting the case to the team at the end of every week.
Week 1: Derivatives – repo, stibor, swap ..
It felt like this week was designed to refresh, but mostly add on, to our school knowledge of basic macroeconomic relationships. We got insightful explanations on short and long fixed and floating interest rates, mechanics and the links between the repo (repurchase agreement), stibor (Stockholm interbank offered rate) and swap rate. We also deep dive into interest rate swaps discussing the mechanism, how to price, pros and cons and how to manage the market value for a swap.
Case of the week: We were asked to help a company restructure and manage their outstanding debt with regards to maturity, nominal amount and interest rates. The company had heavy debt and decreased liquidity due to the coronavirus crisis. We decided to focus on managing risk as well as cutting costs, and proposed entering new interest rate swaps and redesigned old ones for improved rates.
Week 2: FX – cable, FX cross and robots …
After a week full of swaps and interest rate risks, we felt prepared to enter the world of FX (foreign exchange) and currency risk. The FX team provided great energy and introduced us to everything from lingo such as ‘cable’ and ‘kiwi’ and how to assess and identify FX risk in business operations. We were introduced to different solutions which can simplify FX transactions, such as robots and open banking, and discussed various strategies which are appropriate for global businesses.
Case of the week: This case was about managing FX risk for a rapidly growing start-up company being active in over 200 countries. The case allowed us to identify key risks and analyze the most critical FX cross and its development, USDSEK.
Week 3: Risk Solutions – Key risk, FX exposure, solutions …
The third week has challenged us in synthesizing knowledge from the two previous weeks to build ourselves a more holistic overview of key risks for clients. We have had lectures in finding risks and how to hedge risks utilizing the balance sheet. Furthermore, we have analyzed a few metrics that are useful in determining a suitable risk solution for each individual client, such multiples include; net debt-to- EBITDA and debt-to-equity ratio. Risk solutions provide a more accounting-driven solution to allocating debt.
Case of the week: This case was especially intriguing as we had the opportunity to work on an ongoing case. The task was to analyze a company’s market risk and currency exposure, and present the risks as well as possible solutions in such way that the client would feel the need to go through with a hedge to the found risks.
Time flies when you’re having fun
Our first three weeks here have flown by quickly – we have learned so much in a very short time. There are a lot to digest, so it is perfect timing with a week of vacation. But we are really looking forward to returning to the second part of our internship, where weeks of more FX as well as trading, investments and macro are awaiting us.
We will be back soon – with more insight to our internship life at Markets in Stockholm.
Meanwhile, see what the summer interns in Oslo are up to these days …
– check out the introduction blog, presenting Anna, Gabriella and Johanna’s …
– and/or have a look at what went on with last year’s summer interns at Markets in Stockholm.
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