Interest rate hedging

For better planning of interest costs

When it comes to long-term financing, it makes sense to consider the risk of rising interest costs. We show you how you can protect yourself against interest rate risks.

Interest rate hedging at a glance

Making it easier to plan

Reliable planning of interest costs over the entire term of the investment

Protection against rising interest rates

Protect investments from the negative consequences of rising interest rates

Remaining flexible

Capital requirements can be adjusted at every rolling deadline

Hedging by means of targeted product selection

Regardless of the type of financing, suitable products allow you to mitigate the negative consequences of rising interest rates or even eliminate them entirely. There are several options available to you:

  • Combining different terms to maturity: Diversifying the interest rate fluctuation risk by staggering the due dates/terms to maturity.
  • Forward contract: Entering into a financing arrangement with a fixed interest rate (e.g. fixed loan) before the cut-off date for payment. This can also be used for refinancing to hedge the interest rate risk in advance.
  • Ordinary switch to a different product: If the type of contract (e.g. SARON Flex mortgage) allows it or once a fixed-interest period has expired.

Hedging using interest rate derivatives

With interest rate derivatives, you can hedge your financing arrangements against interest rate risks. This makes it easier to plan and protects your company against unfavorable interest rate trends. Interest rate derivatives are particularly suitable for larger companies or real estate companies since a certain minimum volume applies. There are various hedging instruments available, and their individual benefits and risks should be analyzed in detail based on the client's circumstances. One of the most common interest rate derivatives is swaps.

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