Capital Markets

Associated has executed over $2 billion in interest-rate hedges and provides a wide range of risk management products, including swaps, caps, and collars against multiple rate indexes. The marketplace has established well-defined documentation, accounting and termination procedures which allow for streamlined, predictable execution.

Interest-Rate Swaps:
Interest-rate swaps are an efficient way to achieve a fixed rate on larger commercial loans, syndicated loans, floating-rate taxable and tax-exempt bonds, and similar instruments. Swaps have gained wide acceptance over the past 25 years, growing to be a $200 trillion market. Some of the benefits include:

Flexibility

  • Borrowers can separate the financing decision from the fixed/floating decision
  • Multiple structures allow for rate-hedging solutions on amortizing term loans, delayed draw loans, construction drawdown schedules, partial hedges, and interest-only or revolving borrowings.

Portability

  • With bank approval, swap can be transferred to another party or another loan
  • Can cover floating rate loans from multiple banks

Value

  • Two-way “make-whole” replaces one-way prepayment.
  • No upfront fees – bid-ask spread built into swap rate.
  • Protection against rate volatility

Interest rate caps, floors and collars

Caps, floors and collars are products used to manage floating rate risk while minimizing costs. Caps and floors are option contracts and can greatly enhance the flexibility in managing financial assets and liabilities. Used together or in combination with other hedging products, these contracts are efficient tools for reconfiguring a company's financial risk profile.

Associated Bank can provide customized hedging solutions, from simple rate-fixing alternatives to more complex asset-liability strategies to help borrowers manage their overall cost of capital. Our emphasis is on developing understandable risk-management arrangements helping clients make appropriate use of established hedging products.


Contact or email us to see how our Financial Institutions Group can help you.

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