Interest rate derivatives

Minimize your FX risks with a variety of effective solutions

      Interest rate swap

Interest rate swap is a contract in which each party commits to pay the other an amount of fixed or floating interest based on the same nominal amount in a period of time. According to which, you can swap the fixed interest you’re currently paying to get the floating interest from Vietcombank and vice versa. 

Benefits

  • Fix the interest expense, avoiding interest rate increase;
  • Budget you cash flow and cost;
  • Can enjoy floating interest rate in favorable market or lock at low fixed interest rate;
  • Have opportunity to gain from early contract closure. 

      Interest rate options

Interest rate options is a contract in which the buyer pays to the seller a fee to buy an option on interest. According to which, the buyer has the right, but not the obligation, to exercise that option; but the seller has to perform that obligation if the buyer wants to.

Interest rate caps

Interest rate cap is a contract in which you (the buyer) will receive from Vietcombank (the seller) if the reference floating interest rate increases above a strike interest rate agreed in the contract.  

Benefits

  • Hedge against interest rate increase by choosing a maximum rate to pay;
  • Your cost is limited within the fee paid; no other commitment involved.

Interest rate floors

Interest rate floor is a contract in which you (the buyer) will receive from Vietcombank (the seller) if the reference floating interest rate falls below a strike interest rate agreed in the contract.  

Benefits

  • Hedge against interest rate decrease by an “insurance” if interest rate falls below a certain level;
  • Your cost is limited within the fee paid; no other commitment involved.

Collars

This is a contract in which you conduct simultaneously two transactions, including buying an interest rate cap and selling an interest rate floor, with the same reference floating interest rate, tenor and nominal amount.  

Benefits

  • Buying an interest rate cap helps you hedge against interest rate increase;
  • Selling an interest rate floor earns you some income.

Reverse collars

This is a contract in which you conduct simultaneously two transactions, including buying an interest rate floor and selling an interest rate cap, with the same reference floating interest rate, tenor and nominal amount.  

Benefits

  • Buying an interest rate floor helps you hedge against interest rate decrease;
  • Selling an interest rate cap earns you some income.