Ruth Hardie, Senior Director, Client Services, Hedge Trackers explains how to when and where to use floors and other techniques to ensure that negative rates do not jeopardize your interest rate hedging programme
The WEBchat covers:
- Four major factors in interest rate hedging
- Variable rate debt
- Protecting volatility
- You did not match the floor, so what do now?
- What can be done to create an effective hedge
- Key timing points
- 0:38 4 major factors in IC hedging and accounting
- 1:36 Variable Rate Debt
- 1:45 - How floors impact variable debt
- 4:00 - Floor value – How they are moving
- 6:12 Protecting volatility
- 6:15 - Understanding your risk appetite
- 8:06 - Derivative structure
- 11:41 You didn’t match the floor, so what do you do now?
- 11:45 - Effectiveness assessment requirements
- 14:11 - What can be done to create an effective hedge?
- 16:45 - Key takeaways
- 18:28 Final comments
CTMfile take: Ruth Hardie’s advice on how to use floors and swaps to protect your company in today’s low interest/negative rates environment could save you loads.
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