The Hidden Costs of Non-Zero Interest Rate Floors in European Variable-Rate Debt Facilities

The Hidden Costs of Non-Zero Interest Rate Floors in European Variable-Rate Debt Facilities
March 2015
 
Floors above zero percent in leveraged finance transactions are not nearly as prevalent in Europe as they have been in the USA, but they have featured in an increasing proportion of European deals in recent years. The rationale for


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Going Long: Four Ways to Mitigate the Risk of Long Term, Fixed-rate Lending

Going Long: Four Ways to Mitigate the Risk of Long Term, Fixed-rate Lending
August, 2014

For any Financial Institution that wants to use derivatives to mitigate the interest rate risk associated with longer term, fixed-rate lending, the path forward can be daunting.
 
This bulletin answers the following questions: Where do you start? Which


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Overpaying for Baking Soda (and Underpaying for Ice Cream)

Every time we run to the grocery store or pharmacy for household staples like baking soda or ibuprofen, we’re faced with a choice – to buy the name brand or the store brand. On the one hand, there’s something reassuring about purchasing a nationally-recognized brand; after all, if they can afford to advertise during


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Financial Institutions Case Study: Asset Liability Management

Financial Institutions Case Study: Asset Liability Management
Our Client:
A regional bank with a newly issued brokered CD portfolio.
Situation:
Our client was asset-sensitive and had just issued 5yr brokered CDs that paid a fixed rate of interest. The client lends to borrowers at a floating rate of interest plus a credit spread, with a


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Borrower Swap Solutions

Borrower Swap Solution, hedges finance, hedging finance

Offer borrowers a fixed rate without taking on the interest rate risk

Many banks find it challenging to meet their commercial borrowers’ demands for long-dated, fixed-rate loans without violating their own lending policies. Yet they risk losing these clients to larger financial institutions that offer synthetically fixed-rate loans comprised of a floating rate loan and…


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Serving Financial Sponsors

Chatham works with financial sponsors at many of the largest firms globally. Our spectrum of deals over the years gives us a rare perspective on how to add value to maximize their investment goals. Chatham’s holistic strategies reflect a deep currency, rate and hedge accounting expertise and allow us to devise optimal economic and accounting


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The Hedging Games: Hedge Expires

Following up on your first act can be a daunting proposition… Having seen an interest rate cap through to maturity, you know a thing or two about managing exposure to rising rates now. You have choices to make when it comes to re-hedging those risks, and program improvements are a natural part of the process. Like any good director (or fan), you have many things to consider before the next installment of the hedging games.


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Investment Fund Risk Analysis & Program Design

PRIVATE EQUITY

Analyzing risk and designing programs for private equity firms
As an investor in companies that involve foreign entities, currency risk becomes an inevitable factor. Private equity investors need to consider these risks in the context of currencies involved. This includes market liquidity and optimal structure of the debt as well as debt of the


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The Fix is In

This is why a growing number of funds look to Chatham for actively re-balancing their portfolios at market rates, rather than putting in orders to trade at a “fixed” rate – we know about and generally aim to avoid peak volatility times for trading.


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Did I Just Miss the Boat?

Ok, so maybe we haven’t seen a run up in rates like this in, oh, almost three years, but that doesn’t mean it’s time to panic.


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