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Fix the interest rate on your loan
Product features
The interest rate swap is a derivative financial instrument for the exchange of fixed for floating interest rate, as well as the reverse – floating for fixed interest rate. A swap with fixed rate for floating rate exchange is also called a simple interest rate swap. Interest payments are based on the notional amount included in the interest rate swap agreement, and the parties do not exchange the face value during the term of the agreement. The floating interest rate is calculated on the basis of a reference interest rate index.
The reference interest index can be: Euribor – for transactions in EUR, Libor in USD – for transactions in USD, Libor in CHF – for transactions in CHF.
The frequency of payments depends on the maturity of the reference interest rate. For example, for one-month Euribor or one-month Libor, the frequency is one-month, and for three-month Euribor and three-month Libor, the frequency is three-month.
Usually IRS transactions are concluded for a period of up to 10 years
The currency of the interest rate swap offered may be the euro.
The interest rate swap is used to hedge interest rate risk
Target market of the product
The Interest Rate Swap (IRS) is a financial instrument, which the Bank manufactures and distributes as a product. The table below sets out the criteria for determining for which client profile the product is compatible with or not.
| Positive | Negative | |
| Type of clients | All types of clients - retail, professional and eligible counterparties | - |
| Clients’ knowledge and experience | - The movement and the possible expectations regarding the hedged reference values - Lost profits or realized losses related to a negative change in reference values - Hedging cash flows by entering an IRS in relation to interest payments on credit exposure - Maintenance of collateral required when concluding an interest rate swap transaction | Does not meet the indicated knowledge and experience requirements |
| Clients’ financial situation with a focus on the ability to bear losses | - To bear a negative result on periodic netting payments on the swap, within the maturity of the instrument; - The existence of a credit exposure whose interest payments compensate for the possible negative mentioned above | - |
| Clients’ risk tolerance and compatibility of the risk | If the objective is hedging, the client's risk appetite will not be considered | Inclined to bear the risks of negative deviations of the reference values in the presence of a long-term loan or if they do not have a credit exposure |
| Clients’ objectives and needs | To hedge an exposure | - |
Contact dealers:
Deyan Mankovski – Director of Treasury Sales Department – 02 80 10 862
Velichko Dimov – Dealer, Treasury Sales Directorate Department – 02 93 91 126
Oktay Hasanov - Dealer, Treasury Sales Department – 02 97 66 236
