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Interest rate risk /
Timing

Execute your hedge at the right time

INTEREST RATE RISK > Strategy > Timing > Transaction > Monitoring

Once you have determined an appropriate strategy, you will likely want to (partially or fully) hedge your interest rate exposure, possibly in a phased manner. Interest rate markets move from day to day, and the impact of good timing cannot be underestimated. Looking at the EUR 5-year swap rate (IRS), we see significant differences on both an annual and monthly basis:

  • In 2023, the difference between the lowest and highest point was a whopping 1.15% (2.35% low; 3.50% high).
  • In March 2024, the difference was 0.20% (2.61% low; 2.81% high). 

For every EUR 10 million of financing, each basis-point (0.01%) difference will result in EUR 1,000 higher or lower annual interest expenses. This may not seem much, but with an average funding maturity of 5 years, the 115 basis-point movement in 2023 would amount to a EUR 575,000 impact on your bottom line. 

You probably lack the time to closely monitor the interest rate markets all day long. ICC's analysts and advisors do this for you. They follow world-leading research and carefully weigh all arguments and scenarios. In their periodic analyses, they provide the most likely scenarios for short-term and long-term interest rates, including the main pros and cons. In addition, we provide you with periodic pricing updates of your intended hedges and proactively inform you of the best time to take action. Our clients are better informed in less time, allowing them to make well-informed and well-timed decisions.