We offer your business effective management tools to minimize your interest rate risk. These tools give you the ability to lock in current interest rates and provide protection against potentially higher rates in the future. Our experience in offering interest rate risk management as an enhancement to floating rate financing can give your business a valuable edge.

We’ll help structure a risk management strategy that meets your specific needs1. Among the interest rate risk protection solutions we provide:

Interest Rate Swaps

A swap is a financial contract involving an exchange of interest rate payments between you and Comerica. Under a typical swap agreement, you would agree to make payments to us based on a fixed rate of interest, while agreeing to receive payments based on a floating rate index, such as LIBOR or the prime rate. When paired with a floating rate loan which floats on the same index, a swap effectively converts your variable rate cost of borrowing to a steady fixed rate for the life of the swap agreement. 

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Interest Rate Caps

Cap agreements are another way of limiting your exposure to the uncertainties of variable rate financing. 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, allowing you to benefit from an attractive rate of interest on your floating rate loan. We can help you select an appropriate level of rate protection at a cost that works for you.

Interest Rate Collars

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. Simply put, 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 suit your hedging requirements. We can show you a range of customized possibilities from which to choose.

At Comerica, helping you manage and minimize your interest rate risk is another way we are committed to helping you succeed. You can count on us to understand — and meet — your financial needs every step of the way.