Swaps

Through swap agreements we give customers a chance to effectively manage their cashflows and risks by minimizing their borrowing costs.

  • Currency Swaps
  • Interest Rates Swaps
  • Cross Rate Swaps

Currency Swaps

  • A currency swap is a contract in which the parties agree that cash flows denominated in two different currencies will be exchanged (“swapped”) at a stipulated date or for a stipulated period of time at the exchange rate currently then in effect.
  • Currency swaps bear no exchange rate risk but are exposed to interest rate risk.
  • Currency swaps are typically used to reduce borrowing costs and/or to normalize cash flows without incurring exchange rate risk.

Interest Rates Swaps

  • An interest rate swap is a contract in which the parties agree to exchange the interest cash flows on debts denominated in the same currency by converting a fixed to a variable rate or vice-versa. Interest rate swaps provide an effective way of managing interest rate risk.
  • In an interest rate swap there is no exchange of principal: only the interest cash flows generated on them are exchanged.

Cross Rate Swaps

  • A cross rate swap is a contract that combines the features of both an interest rate and an exchange rate swap. It is an effective way for the parties to simultaneously manage both their (fixed and variable) interest rate and their exchange rate risks.

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