Interest Rate Risk Management

 Financial instruments designed to provide protection against adverse interest rate fluctuations

What is it

Interest rate risk management aims to protect companies against volatility of interest rates (such as EURIBOR, SOFIBOR, LIBOR) , that their bank loan payments depend on.

This protection is achieved by ensuring:

  • A fixed interest rate level for the entire loan period
  • The maximum and/or minimum interest rate that provide a worst-case scenario with the option to take advantage of more favorable interest rate levels.  

Advantages

  • Up to 100% protection against fluctuations in interest rates

  • Up to 100% predictability of future interest payments, cost of financing etc.

  • Opportunity to use favourable market movements

  • Customized products tailored to the client's exposure

Types of Instruments

UniCredit Bulbank offers a wide variety of derivative instruments tailored to needs of each client.

The main tools include:

  • Interest rate swap
  • Interest rate options - cap, floor, swaption
  • Interest collar
  • Tailored solutions

Whom is it Suitable for

  • Companies with investing or revolving credit exposures based on the floating rate index

  • All Corporate and Investment Banking clients

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