Capital Markets: Hedging against interest rate risk

Loan structuring is more vital than ever in a rising interest rate environment

By Erik Tellefson

In a rising interest rate environment, loan structuring is more important than ever in order to protect lenders and borrowers. For lenders, the right structuring can keep a loan from deteriorating in debt service coverage as rates increase. For borrowers, it can help avoid issues both in covering their debt service as well as hedging their future interest rate risk and protecting their cash on cash return.

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