Interest Rate Swap

Interest rate swaps are simply the exchange of one set of cash flows, based on interest rate specifications, for another. The most common type is the plain vanilla swap. It involves one party (fixed-rate payer) making fixed payments, and the other party (floating-rate payer) making payments dependent on the floating interest rate index. An interest rate swap can “fix” interest costs on variable rate debt.

Interest Rate Cap

Benefit from an attractive rate of interest on a floating loan rate while minimizing upside risk. An interest rate cap1 protects your organization against rising interest rates. Rather than fixing an agreed-upon rate of interest, caps set an upper limit on the index underlying your floating rate debt. This establishes a maximum cost of financing for the life of the cap agreement.

Interest Rate Collar

Limit interest rate risk within a known range by agreeing to both a cap and a minimum rate. A collar is a customized contract, which combines an interest rate cap with an interest rate floor, to establish a maximum range of movement for a floating interest rate index. Typically, by adding a floor, a borrower reduces or eliminates the up-front fee associated with a cap.


1Available for an initial fee.