Interest Rate Swaps

An Interest Rate Swap is the exchange of one set of cash flows for another and it is one of the debt hedging mechanisms that KBC Bank Ireland offers through our Corporate Treasury division.

At KBC Bank Ireland we understand that no business wants to be at the risk of volatile interest rate movements and so we offer products to guard against this. An Interest Rate Swap can do this, although it should be noted that it is a product that is generally only available to corporate clients.

The most common type of Interest Rate Swap is the exchange of fixed rate flows for floating rate flows to provide protection against adverse interest rate movement. This is a stand-alone product and is a contract in its own right. This product can also be used to protect depositors from falling interest rates. It provides the same protection as a fixed rate loan and the great advantage of this approach is that interest rate payments are known for the duration of the contract, thus removing volatility. However, there are downsides to this approach. For example, for the duration of the contract the client cannot avail of favourable interest rate moves.

Our experts in the Corporate Treasury division will be very happy to discuss this product with you in more detail if it is something that you believe may be advantageous for your business.