KBC Bank Ireland offers a range of debt hedging services through its Treasury and Capital Markets division.
A fixed rate loan gives protection against rising interest rates meaning the borrower does not have to contend with varying loan payments that fluctuate with interest rate movements.
An Interest Rate Swap is the exchange of one set of cash flows for another. Although a stand alone product in its own right, this product can also be used to protect depositors from falling interest rates.
A cap allows the client to benefit from falling/stable interest rates, while protected above a pre agreed interest rate. A collar works the same way as a cap but with a known minimum interest rate.
Currency swaps are, closely related to interest rate swaps except that they can involve the exchange of the same principal amounts at the start and maturity of the transaction. Interest flows are also exchanged during the life of the contract.
KBCI does not offer investment advice. Capital market products are intended for non-retail clients.