Interest Rates

Interest Rate Risk Management

As global borrowing costs surge as central banks take measures to combat inflation, the spotlight on cost-management strategies intensifies, particularly concerning long-term loans. Within this context, Foreign Currency Funding emerges as a favoured method for trimming borrowing expenses by bringing in Interest cost reduction. There are many challenges that corporates encounter. QuantArt has unparalleled expertise in advising on potential strategies and identifying correct measures to curtail borrowing costs, with a keen emphasis on long-term loans. While evaluating on how to bring about Interest cost reductions, we look at many perspectives. To name a few- we get involved in the judicious selection of currencies, the implementation of hedging methods, risk management through floating interest rates, and adherence to regulatory guidelines. We look at the advantages of Interest Rate Swaps (IRS) and curve inversion, offering a thorough breakdown of costs associated with Fx Option hedges and IRR in both USD and INR.

We have established a strong trust with our clients. We believe in long standing associations. Client from our starting years continue to work with us. When you choose an advisor, you should always choose the best.

Interest Rates Services

Loan Interest Rate Reduction

We will be evaluating your working capital and term loan portfolio. On the working capital, we will advise you when to go for PCFC, PCRE, EPC, FCTL, CC, CP, etc, and what rate you should get. On the term loan side, we will advise you on ECB, FCTL, RTL, and how you can manage Foreign currency risk or fixed floating risk so that overall you achieve cost savings.

Loan Hedging and Strategy Evaluation

We support the evaluation of various hedge strategies like swaps, option-based hedging, short-term hedging with rollover, tranche hedging, partial amount hedging, etc. Within swaps also there are multiple variants and IRR calculation for each of the choices will be evaluated. Within option structures, we will be evaluating plain calls, out-of-the-money calls, spreads, staggered call spreads, etc. Optimum hedge structure reduces interest cost.

Pricing of Loan Strategies and IRR Scenario Analysis

We will be involved in the pricing of strategies and the computation of IRR under various scenarios. There is a deep understanding of credit charges and bank models which helps in the reduction of cost.

Interest Rates Services

Pricing, Negotiations and Cost Savings

We will set up the system for Negotiation of the pricing, strategy for getting effective pricing, and support in negotiations if required. This will be an extremely important aspect as the possibility of leakages can be significant. Often banks charge the high prices on deal execution and considering we have worked in senior management positions in both Indian and Foreign banks we understand the psychology and the tricks of the trade. We help the companies in appropriate strategizing to get the right rate while dealing with the banks.

Appropriate use of Options and Swaps

Using options help at times. However, option-based hedging should not be done without deep understanding. We educate and handhold companies in understanding vols surface, Greeks like delta, gamma and how to use the Greeks for decision making and monitoring.

Structured Financing

We bring structured financing ideas and execution to corporates. Structuring involves tweaking of securities, the composition of loans, fixed-floating switching, international borrowing, etc.

How we help our Commodity Clients

How we help our Commodity Clients

What is our vision for our clients?

Our aim is to offer a stable and cost-efficient environment for our clients, enabling them to concentrate on their core business areas. We are committed to overseeing all facets of risk management and hedging on behalf of our clients.

With what objective was QuantArt started?

Our intent was to instill transparency in operations, establish quantitative accountability in result assessments, implement strategic excellence based on proprietary algorithms, and exhibit proactive responses to market movements. The ultimate goal was to ensure client profitability regardless of the direction of market fluctuations.

How have we been successful in continuously bringing value for our clients?

We have an outstanding track record of attaining measurable results aligned with the specific objectives we set in collaboration with our clients. This achievement is made possible by our meticulous selection of highly skilled experts in Treasury/FX risk management. What sets us apart is our distinctive approach—our advisory services are directly provided by senior advisors and directors without any delegation. Each client’s portfolio receives dedicated attention from one of the three members of our leadership team. They conduct thorough reviews every morning and evening, strategizing on the optimal course of action. QuantArt aligns closely with each client’s vision, establishing quantifiable and measurable objectives for a mutually successful partnership.

Exclusive Reports

We release well researched reports on Global markets-Outlook and Strategies, Global currencies, Commodities, Risk management and Hedging strategies, Hedging instruments and Best practices. Log on to QuantArt Hedgenius to access our Exclusive Reports.

As we step into 2024, the Eurozone is grappling with a series of economic setbacks. The third quarter of 2023 saw a startling halt in growth, with the region’s economy performing worse than expected, and Germany’s GDP declining by 0.4%. The manufacturing sector is struggling, highlighted by a Purchasing Managers’ Index of just 47.1, indicating contraction for the sixth consecutive month. Business lending has seen its first drop in eight years, falling by 0.3%, while the real estate sector is facing a daunting €176 billion refinancing gap by 2027.

India’s steel sector shines with a robust 11.4% year-on-year growth, outpacing a global slowdown as November sees a dip. The nation’s surging construction, fueled by infrastructure investments, forecasts a sturdy 7.7% steel demand hike in 2024. Keep an eye on this dynamic market as it defies trends and powers ahead.

In our January 2024 report, we take a closer look at the British Pound (GBP) as the UK faces a tough economic period with a 0.1% GDP contraction, a significant trade deficit of £4.480 billion, and high inflation rates. Despite efforts by the Bank of England to keep inflation under control, it remains high at 3.9% year over year, down from 4.6% but still nearly double the Bank’s 2% target. Unemployment is relatively stable at 4.2%, but manufacturing activity is slowing down, with the PMI falling to 46.4. This report covers short term and medium term outlook on GBP and provides practical hedge strategies for dealing with GBP in these uncertain times?.

As we step into 2024, the Eurozone is grappling with a series of economic setbacks. The third quarter of 2023 saw a startling halt in growth, with the region’s economy performing worse than expected, and Germany’s GDP declining by 0.4%. The manufacturing sector is struggling, highlighted by a Purchasing Managers’ Index of just 47.1, indicating contraction for the sixth consecutive month. Business lending has seen its first drop in eight years, falling by 0.3%, while the real estate sector is facing a daunting €176 billion refinancing gap by 2027.

Discover the latest strategies for Indian IT/ITES exporters in 2024. With the USD-INR rate at 83.25 and a forward rate of 84.65, learn how options like Seagull and Range Forwards offer better flexibility and protection against currency depreciation. This presentation unveils how these options outperform traditional forward contracts, ensuring better financial outcomes in uncertain economic times.

Unlock the secrets to smart borrowing in 2024 with our analysis of global interest rates. Discover why USD, GBP, AED, and INR have higher rates, while EUR, CHF, and JPY are more affordable. Learn how to navigate the tricky landscape of interest rate swaps and currency risk management to optimize your borrowing costs. Our guide provides crucial insights into managing loans in a high-interest rate environment while adhering to local regulations, making it an essential tool for savvy financial planning.

We can work with your team to enhance their skills

Training and Capacity Building

Borrowing Cost Reduction Strategies

Here’s what we will cover during the session-

  1. The appropriate currency for borrowing 
  2. Optimizing with the Right Hedging strategy and instruments 
  3. Efficiently managing floating interest rate risk  
  4. Meeting regulatory and stakeholder requirements 
Interest Rate Hedging and Management of Loans

Here’s what we will cover during the session-

  1. Interest Rate Outlook. 
  2. Interest Cost Reduction Strategies. 
  3. Hedging of Interest Rates 
  4. Selection of Right Tenor. 
Swaps – Instruments and Pricing

Here’s what we will cover during the session-

  1. Swaps – Concept of FRA, interest rate and currency swaps. 
  2. SOFR and RFR dynamics – O/N and Term SOFRs 
  3. Interest rate curves – SOFR, EURIBOR and other RFR curves,  
  4. Concepts of FRA and IRS 
  5. Swap conventions – day count, frequency, stub etc. 
  6. CCS, POS, COS 
  7. Basics of swap pricing – Yields and zeros, Bootstrapping, Discount factors and swap pricing 
  8. Swap pricing in excel 
  9. Cross currency basis and pricing cross currency swaps 
  10. LTFX pricing and equivalence to swaps 
  11. Evaluation of strategies – IRR calculations 

We can work with your team to enhance their skills

Solutions

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