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Hedging solutions

Financial Hedging Solutions & Derivatives Explained

Below we have set out explanations of some of the more commonly used hedging products for interest rates, foreign exchange and commodities.

Interest Rate Swap

Vanilla interest rate protection that fixes funding costs.

Interest Rate Cap

Protects against rising interest rates but allows borrower to benefit if rates fall.

Interest Rate Swap and Floor

A synthetic interest rate cap.

Participating Interest Rate Swap

A combination of swap and cap, combining fixed rate protection and flexibility.

Interest Rate Swaption

Offers the right – but not the obligation – to enter into a swap at a pre-agreed rate in the future.

Cancellable Swap

A Swap that may be cancelled by the Borrower at no cost on an agreed date in the future.

Interest Rate Collar

Protects against higher rates while allowing borrower limited flexibility to benefit from lower ones.

Commodity Call Option

Protects the holder from higher prices while maintaining the ability to benefit from lower ones.

Commodity Put Option

Protects the holder from lower prices while retaining the ability to benefit from higher ones.

FX Forward

Vanilla protection against an adverse FX movement.

FX Swap/Rollover

Facilitates the lengthening or shortening of an FX forward.

FX Option

Protects against an adverse FX movement but allows the holder to gain from a beneficial one.

FX Collar

Protects against an adverse FX movement while maintaining limited ability to gain from a beneficial one.

How can we help you

Have you got a question about how you hedge your financial risks, or structure and arrange your debt?

Find out how we can help you by contacting us today.

 

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