Interest Rate Risk
Interest rate risk is a major concern for many clients, both institutional and corporate. A rise in interest rates can significantly increase loan interest payments which consequently can result in material losses for an organisation. On the other hand, money managers with floating rate investments may suffer from a decrease of incoming cash flows as a result of a rates decrease.
We work closely with our clients in assisting them hedge their interest rate exposure using appropriate tools and techniques. For instance, using suitable instruments we enable corporate clients to fix their floating rate exposure and effectively to convert their floating rate liabilities into fixed ones. Likewise, similar approaches can be used by fixed income investors for converting their floating coupon payments into a fixed income stream.
Examples of such products include:
- Interest Rate Swaps
- Interest Rate Caps
- Interest Rate Collars