Interest Rate Risk Management​​​​​​​​

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Enhance floating rate financing. Minimize interest rate risk.

Comerica offers tools to enhance floating rate financing and minimize your interest rate risk. These tools enable you to lock in current interest rates and protect your company against potentially higher rates.

Your Comerica relationship manager can structure a solution to take the uncertainty out of interest rate fluctuations. Helping you manage and minimize your interest rate risk is yet another way Comerica is committed to your success.

Among the interest rate risk protection products Comerica provides:

  • Interest Rate Swap: Under a typical swap agreement, you agree to make payments to Comerica based on a fixed rate of interest, and to receive payments based on a floating rate index (such as LIBOR or the prime rate).   When paired with a floating rate loan that floats on the same index, a swap converts your variable rate cost of borrowing to a steady fixed rate for the life of the swap agreement.
  • Interest Rate Cap: Cap agreements are another way to limit your exposure to variable rate financing fluctuations. Rather than fixing an agreed-upon rate of interest, caps set an upper limit on the index underlying your floating rate debt.   This establishes a maximum cost of financing for the life of your cap agreement.   This upper-limit allows you to benefit from an attractive rate of interest on your floating loan rate while minimizing your upside risk. We can help you select an appropriate level of rate protection at a price that works for you.
  • Interest Rate Collar: Collar agreements establish both a protective upper limit on a variable rate index and a lower threshold below which you no longer benefit from declining rates. Financing costs are effectively “collared” between these upper and lower limits. A collar can represent a lower cost alternative to a cap agreement, which may better fit your hedging requirements. We can show you a range of customized possibilities from which to choose.
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