DNB Markets has a range of financial instruments to manage interest rate risks.

The advantages are:
  • To protect yourself against interest rate fluctuations
  • To adapt the loan structure to expected interest rate development
  • The products are flexible. They can supplement a client’s existing loan agreement or other balance sheet items. 
The interest rate contract is priced using STIBOR (or another suitable interest rate in the relevant currency) as a reference rate. The contract is adapted to the underlying loan with respect to the payment structure and term. The contract regulates the conditions for the payments exchanged between the bank and the client. As a rule, one of the parties pays floating STIBOR rates.
 
The fixed interest rate is established based on the interest rate level at the time the transaction is conducted. As time passes, the value of the contract will change, not just as a consequence of interest rate levels, but also as a consequence of a shorter term to maturity. The contract can be renewed at any time. The client can purchase or sell products and therefore enter into or terminate a contract.
 
This enables the proportion of loans with fixed and floating interest rates in the loan portfolio to be changed without the need for refinancing. The use of interest rate contracts means a significant degree of flexibility in loan management. This is also the reason for the steadily increasing use of these products.