Q. Benefits of Interest rate swaps?
Interest rate swaps may provide several benefits to companies including:
- The ability to get finance at a cheaper cost than would be possible by borrowing directly in the relevant market.
- The opportunity to efficiently restructure a company's capital profile without physically redeeming debt.
- Long-term hedging beside interest rate movements as swaps may be arranged for periods of several years.
- The ability to access a kind of finance which could not be accessed directly for instance because the borrower is relatively unknown in the market or has a relatively low credit rating.