Interest Rate Collar

county

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I am just wondering do banks do interest rate caps/collars for small commercial loans?

I basically want to hedge against interest rates increases over the coming years and am currently on a euribor rate + margin.
 
I am just wondering do banks do interest rate caps/collars for small commercial loans?

I basically want to hedge against interest rates increases over the coming years and am currently on a euribor rate + margin.

Depends on the size of loan, I would imagine it would have to be somewhere over 500k, and you may have to go through a range of documentation around suitability, awareness of the worst-case scenarios etc. A vanilla structure like capped or collar/range rate loans (i.e. the options is a feature of the loan a bit like a fixed rate) should be available from most commercial banks. I think Ulster and NIB used to do them.

Doing a stand-alone interest rate option would require signing up to an ISDA document, most likely putting up some form of collateral to allow for market movements on the valuation of the option.
 
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