Forward Rate Agreement

Forward Rate Agreement

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Do you plan to borrow/invest, but worry that short-term interest rates will increase or fall?

 

In that case, we suggest that you fix the interest rate on your future loan/investment now via a Forward Rate Agreement.

 

Under this agreement, the bank guarantees to the buyer, for a specified period, a negotiated rate for a loan/investment for a defined amount and term.

 

At the end of the hedging period, the bank pays the buyer the interest differential between the market rate and the negotiated rate.
 




 

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