Contingent Interest Rate Hedges

Contingent Interest Rate Hedges

Selim Toker

30 years: Derivatives & risk management

In this video, Selim has explained the context in which rate risk arises in event-driven transactions, and discussed the factors that will drive the pricing of a deal contingent hedge to eliminate this risk. He further examined the reasons why the pricing might differ from an FX DC.

In this video, Selim has explained the context in which rate risk arises in event-driven transactions, and discussed the factors that will drive the pricing of a deal contingent hedge to eliminate this risk. He further examined the reasons why the pricing might differ from an FX DC.

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Contingent Interest Rate Hedges

9 mins 29 secs

Overview

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

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This content is also available as part of a premium, accredited video course. Sign up for a 14-day trial to watch for free.

Summary
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Expert
Selim Toker

Selim Toker

After a 30-year career in Investment Banking, Selim Toker transitioned to the FinTech space and is currently the Chief Strategy Officer of incard, a digital banking and financial services platform targeting e-commerce and digital entrepreneurs. Prior to that Selim spent 17 years at UBS and 12 years at Nomura, focussed on derivatives advisory, structuring and marketing.

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