Loan-Level Hedging

Chatham Financial is a leading provider of outsourced solutions, enabling banks to offer interest rate hedging products to their commercial clients. We offer financial institutions a turnkey program that is simple to implement and cost effective.

Chatham acts as your behind-the-scenes partner to facilitate a highly profitable new set of products. Our services help regional and community banks compete against larger money-center banks by using derivatives to synthetically fix long-term loans for commercial borrowers.

In a “back-to-back” swaps program, the bank can offer a pay-fixed swap to its borrower and simultaneously enter into an offsetting swap with a Wall Street counterparty. In the process, the bank can generate significant, upfront fee income, leaving pools of floating rate loans on a bank’s balance sheet, which can be hedged, if necessary, at the macro level to shift the bank’s interest rate posture.

If your commercial borrower is interested in a floating rate loan, instead of a synthetically fixed rate loan, Chatham can help you to offer interest-rate insurance to your commercial borrowers in the form of interest rate caps and corridors. These option products can be used to limit interest rate exposure for your customers.

Chatham provides the complete infrastructure for trading and back-office functions. We coordinate with Treasury, Lending, Credit and Operations to implement the program, and we provide on-call advice for Treasury or Lending points of contact. We establish trading lines, diversify counterparty exposure, and achieve efficient pricing by auctioning (or negotiating) derivatives to Wall Street counterparties. We also provide your commercial borrowers templates and training to market derivatives.