Interest Rate Risk Management
You’ve probably experienced it yourself: a sharp swing in the price of financial products. Nominal interest rates, currency rates and the value of shares can also fluctuate considerably. When this occurs businesses face greater financial risks and an increasingly uncertain business climate. It could therefore time be to consider active interest rate risk management.
Rabobank will gladly help you manage your interest rate risks. Rabobank is a Dutch bank with a triple-A credit rating, and a willing and respected transaction partner. Our advanced dealing rooms provide specialized experience with products that you can use to actively manage your interest rate risks.
The Function of Interest
Interest is simply the differential between the amount of money that is borrowed and that which must be returned. Interest is the fee for the privilege of borrowing money that is typically expressed as an annual percentage of the principal sum.
Foreign Capital
Have you drawn on foreign capital or do you plan to do so? If so then a change in interest rates could have a strong influence on your financial results. If you take out a loan with a variable interest rate then you can profit from a low short-term interest rate. However, at the same time you run the risk of rising money-market rates. If you choose a fixed-rate loan then you enjoy a hundred percent certainty of the rate you will pay. However the cost of such a loan may also put unnecessarily heavy pressure on your business results if your fixed rate is too high or if your financial needs change in the meantime.
Interest Rate Risk Management
Active management of your interest rate risks, conducted in cooperation with Rabobank, offers a number of advantages:
• Better insight into your interest rate risks
• Sound and thorough advice on optimising your financing costs
• The possibility of developing a strategy that is adaptable to your changing circumstances
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