Developing an interest rate hedging strategy for a USD100 million syndicated loan

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Developing an interest rate hedging strategy for a USD100 million syndicated loan

 

Author: Ng, Hon-pong Joseph
Title: Developing an interest rate hedging strategy for a USD100 million syndicated loan
Degree: M.B.A.
Year: 1994
Subject: Hedging (Finance)
Foreign exchange futures
Interest rate futures
Financial futures
Hong Kong Polytechnic -- Dissertations
Department: Dept. of Management
Pages: vi, 79, [7] leaves : ill. ; 30 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b1152489
URI: http://theses.lib.polyu.edu.hk/handle/200/4433
Abstract: With the objective to develop an interest hedging strategy for a hypothetical USD100 million syndicated loan from a corporate treasurer's perspective, relevant internal and external factors directly influencing the choice of strategy are identified and discussed in this report. Although this report is divided into seven chapters, it basically comprises four main sections: (i) introduction and development of strategy development framework; (ii) scanning of internal considerations of the corporation; (iii) review of external interest rate trend and collection of market information; and (iv) strategy formulation and conclusion. Based on the instrument quotations obtained from the two interviewed market practitioners coupled with an interest rate trend review and after taking into account all internal considerations, a 8% interest rate cap at a cost of USD215,000 is recommended as the appropriate hedging strategy for the hypothetical USD100 million loan of four year tenor.

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