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Interest Rate
Hedging

Confidently forecasting future interest rates is critical to mitigating risk. Comerica’s dedicated teams of business advisors bring the knowledge and know-how to successfully navigate ever-changing markets. 

With a variety of hedging options, including caps and swaps, our advisors customize solutions with market insights, real-time data and proactive guidance to help you succeed. 

What you can’t see can hurt you.

Why experienced risk management solutions matter:

  • Eliminate interest rate driven shock to your profits and loss statement.
  • Provide increased visibility of future cash needs.
  • Protect total portfolio assets.
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Interest Rate Swap
  • An Interest Rate Swap is a financial contract that effectively fixes floating rate debt.
  • When a swap is combined with floating rate debt, the client will receive a synthetic fixed rate (not a fixed payment).
  • An Interest Rate Swap is customizable and can be structured to match any portion of the amount, amortization or term of the company’s debt.
Interest Rate Cap
  • An Interest Rate Cap is a financial contract that caps the rate on floating rate debt and limits the interest expense associated with rising rates.
  • Comerica sells a cap agreement to the client who agrees to pay a one-time up-front fee for interest rate protection.
  • When/if the floating rate of the index being capped exceeds the rate specified in the cap agreement, Comerica will pay the client the difference between the current floating rate and the cap rate.
Interest Rate Collar
  • An Interest Rate Collar is a financial contract that limits the rate range on the floating rate debt.
  • The product combines an Interest Rate Cap with an Interest Rate Floor, which is an agreement that limits downward movement of the rate index as the cap limits the upward movement.
  • The client receives a premium by selling the floor to help offset the cost of purchasing a cap with the ability to have a collar at no up-front cost.

Economic Commentary

*Comerica ranks first nationally among U.S. bank holding companies with greater than $70B in assets, based on commercial and industrial loans outstanding as a percentage of assets, as of June 30, 2024. Data provided by S&P Global Market Intelligence.

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