Title

Can Falling Interest Rates Increase a Company’s Financing Costs?
Client Memorandum

Created date

3/17/2016

Companies will often enter into interest rate swap agreements in order to hedge their exposure to interest rate risk stemming from floating-rate debt. These hedging arrangements are designed to fix the financing costs for such companies, but a negative interest rate environment introduces new wrinkles to hedging arrangements that may lead to unintended increases in financing costs.