Besides the extent and nature of the interest rate risk, the selection of a hedge is affected by expected interest rate movements and the market situation.
Based on these considerations, interest rate hedges may include special terms which have an influence on the interest payable.
There are also other types of contracts, such as a contract where the hedge changes into another type of hedge after a certain period of time.
- The market view and market situation are taken into account in hedging. Example of a tailored hedge: the customer receives a discount on the interest expenses during the first years of the hedge.
- The risk of a tailored interest rate hedge depends on the chosen alternative. See the risks of the interest rate swap as a good example of the general risks of separate interest rate hedges. Purchasing the products requires a customer relationship and a general agreement on derivatives with Nordea. Please contact our specialists for further information. We will be happy to help.