Deal contingent transactions allow a buyer to hedge market risks that arise between the signing and closing of a transaction. The risk is mitigated by the fact that if the transaction fails to close when conditions precedent are not met, then the hedging trade will disappear at no cost to the buyer. This video will examine how interest risk arises in event-driven deals and also the factors that drive the pricing of the IRDC product.
Key learning objectives:
Understand the situations in which interest rate DCs are an appropriate hedging strategy
Identify the drivers of the IRDC product pricing