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FINANCIAL MARKET COURSES

Swaps - Applications for Corporates

Financial and non-financial corporates often tap the capital markets to raise money. In borrowing money, corporates seek sources that provide the lowest cost of funds and the type of borrowing (fixed or floating) that best match their business’s cash flow.

 

In this course, you will learn about the different types of corporate borrowers and understand the factors that influence the rates at which they borrow. The course also explains their business goals and the use of derivatives with respect to their capital generation activities.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Define the business goals and objectives of corporates, financial institutions, and other borrowers

    Describe how these market participants use swaps to achieve their goals and objectives

  • COURSE OUTLINE

    Topic 1: Types of Corporate Borrower

    Corporate Borrower – Types

    Corporates

    o Issuer’s Credit Rating

    • Spread to Swaps

    o Investor Familiarity

    o Market Depth

    o Scarcity Value

    o Hybrid Instruments

    Financial Institutions

    o Insurance Companies

    o Savings and Loan Institutions

    o Mortgage Lenders

    o Finance Companies

    • Finance Companies – Capital

    Topic 2: Swap Applications

    Financial Institutions – Applications of Swaps

    o Relative Market Advantage

    • Relative Market Advantage – An Example

    • Relative Market Advantage – Causes

    • Relative Market Advantage – Currencies

    o Converting Existing Floating Rate Liabilities to Fixed Rate

    o Benchmark for Determining Cost of Funds in Multiple Currencies

    o Taking advantage of Preferential Funding Source

    o Maintaining Flexibility Over Funding and Limit Risk

    o Hedging a Future Borrowing Need

    o Hedging Duration Gap Risk

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    75 Minutes

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