More and more companies are becoming aware of the value of targeted interest rate risk management. More and better treasury products are now available for effectively managing these risks. 

These products may be purchased for amounts from EUR 250.000.

Forward rate agreement : fix now the interest you want to pay on a later loan
If you plan to take up a revolving loan in the months to come and you fear that short term interest rates may rise in the meantime, it would be advisable to fix a rate now.

This is precisely what a forward rate agreement achieves.  It establishes a fixed rate in advance and it keeps the danger of possible rising trends at bay.

Cap : hedge against rate rises and benefit from falls
If you plan to take up a revolving loan in the months to come and you are unsure about the evolution of short term interest rates you can purchase a cap option.

As the buyer of the option, you're entitled to a maximum predetermined rate, no matter how high rates evolve until the day you engage in your loan. If market rates are lower at the time the investment takes place, you remain free not to exercise your option and to go for the conditions prevailing on the market.

Through this mechanism, we offer you both total protection against possible rises and unrestricted possibility to benefit from favourable bearish market evolutions.

Interest rate swap : take advantage of lower fixed or floating rates
Companies use short term money to fund their daily business activities.  Their profitability is therefore partly dependent on the evolution of short term interest rates.  Inversely, long term fixed-rate investment loans theoretically make it impossible for you to benefit from downward trends on the short term market.

Fortis Bank offers specialist solutions to take full advantage of favourable market situations, with no expensive loan revision fees to pay.  The interest rate swap is one of them.

The most common type of interest rate swap is the exchange of fixed-rate flows for floating-rate flows and vice versa.

For example, if a company has a lower fixed interest rate while another has access to a lower floating interest rate, these companies could swap to take advantage of the lower rates.

These are only the more commonly used of our solutions.  Find out more about hedging techniques in our extensive brochure (to be accessed from the frame "See also").