Interest Rate Management Program Example
Analysis of Future Interest Rate Risk and Customized Solutions:
- We provide in-depth analysis, including profit and loss implications for various interest rate environments.
- Our financial engineers analyze how different hedging strategies will affect our clients’ profitability.
- Our reports are easy to read and suitable for professional presentations.
Client had a fixed rate loan with yield maintenance pre-pay language. Client intended to keep the loan the first three years of its 10 year term, at which time they would have to pay a penalty to pre-pay the loan. The loan’s prepayment penalty could erode all of their profits.
Solution:
Custom Hedging Solutions analyzed the various scenarios in which the client would owe a prepayment penalty. Our hedging strategists presented the client with various hedging possibilities and indicative pricing, so the client could make an informed decision on whether or not to hedge the loan’s prepayment risk.
Asset Valuation Debt Analysis