Geistesblitz

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Interest optimisation of a KfW promotional loan

Initial Situation For some time now, the continuing low interest rate environment in the  eurozone has been drawing market participants’ attention to longer maturities of 10 years and beyond. In this context, KfW’s more favourable (re-)financing options are often integrated into a comprehensive, tailor-made offer by the intermediary bank. In addition to an attractive client…

Geistesblitz 09/19

Forward-Swap with flexible notional: “Flexi-Swap” Initial situation In the current interest rate environment, the demand for interest rate hedges for longer-term financings remains high. On the other hand, short to medium term interest rate hedges are relatively rare. Many variably financed companies do not use supplementary hedging instruments such as interest rate swaps, interest rate…

Geistesblitz 07/19

USD interest optimization “Cancellable Double-Swap” Initial situation In the March issue, we had already adressed the US interest rate environment and the inverse yield curve. In the meantime, its negative steepness has intensified due to negative news. A significant slowdown in economic growth is feared for 2020. Political crises are not losing momentum, while the…

Geistesblitz 05/19

Shout Forward Initial situation Due to the predominantly declining EUR-USD exchange rates since January last year, USD importers are increasingly hoping for a stronger EUR again. Coming from 1.2513 USD / EUR, the EUR-USD exchange rate currently remains close to its low 1.1153 USD / EUR. In addition to the EUR-USD exchange rates, the EUR-USD…

Geistesblitz 03/19

USD interest hedge with “CombiSwap” Initial Situation Storm clouds are brewing on the horizon of the US economy as well.  The country appears to be in the final stage of the economic cycle. Thus, for short and medium term maturities the yield curve is partially inversed. Since mid-December, the difference between the 5-year swap rate…

Geistesblitz 02/19

5-year hedge of a maximum interest rate using the “interest cap with contingent premium” Initial Situation In the current interest rate environment, the demand for interest rate hedges for longer-term financings remains very high. Short to medium-term interest rate hedges, on the other hand, are relatively rare. Many variably financed companies do not use supplementary…

Geistesblitz 01/19

3-year average rate hedge using a ‘multi-EUR-GBP hedge with limited minimum rate’ Initial Situation Despite a postponement of the House of Commons vote, the British Prime Minister Theresa May has not yet achieved the necessary majority for her Brexit plan negotiated with the EU Commission. In its vote on January 15th, the House of Commons…

Case LPA Doc

LPA-Geistesblitz 5/2018

Variabilisation of a fixed-rate financing using a “Cancellable Receiver Swap with Cap” Initial Situation In an earlier edition of the „Geistesblitz“ we discussed the increase in fixed-rate financing.1 The interest of corporate customers in alternatives to a variable bank loan is rising. Fixed-rate bank loans, promotional loans (low-interest loans from public sector banks), corporate bonds…

Case LPA Doc

LPA-Geistesblitz 4/2018

Which market parameters have an impact on the attractiveness of the TARF?   The TARF in the current EUR-USD market environment The EUR-USD market environment is characterized by two mutually amplifying developments. On the one hand, the EUR-USD spot rates have been rising substantially since the beginning of 2017 (see figure 1). On the other…

Case LPA Doc

LPA-Geistesblitz 3/2018

KIDs for PRIIPs: Analysis and interpretation of performance scenarios  1. Preliminary remark. The KIDs (Key Investor Information Documents), which have been mandatory since the beginning of the year for PRIIPs (Packaged Retail and Insurance-based Investment Products), are another element in strengthening investor protection and increasing the transparency of financial instruments. The pre-contractual documents, governed by…

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