Interest Rate Derivatives
Specialized Protection for Borrowing, Buying and Selling
Associated Bank offers additional products to give you a financial edge when you borrow or trade.
Hedging Forward Contracts
Hedge against an interest rate increase even before fixed-rate debt is issued. Forward contracts are interest rate swaps that begin on a specific future date, with the fixed rate set today.
Buy or sell goods in countries where the currency is relatively illiquid—due to government restrictions or developing capital markets—and protect against currency fluctuations. Non-deliverable forwards are contracts usually settled in U.S. dollars. One party pays the other the difference between the NDF rate and the prevailing spot market rate on the NDF’s face value.
An interest rate swap option, or “swaption,” gives you the right—but not the obligation—to enter into an interest rate swap at or until some future date, at a fixed interest rate set today. You pay a premium for this option. Swaptions enable your organization to limit the cost of a potential capital outlay.
Ask your Associated Bank relationship manager about the advantages your organization can gain with a variety of financial derivatives.