Hedging Interest Rates in Commercial Real Estate Finance: Rate Caps vs. Swaps, Security, Intercreditor Issues
Recording of a 90-minute premium CLE video webinar with Q&A
This CLE webinar will describe the use of interest rate caps and swaps as a hedging strategy to mitigate the risk and uncertainty of volatile interest rates. The panel will address the circumstances when an interest rate hedge is appropriate and best practices for documenting the transaction.
Outline
- Market conditions and how interest rate hedges are currently being used
- Purpose of interest rate hedges
- Rate caps
- Swaps
- Security considerations
- Intercreditor arrangements
- Existing financings
- Interest rate hedge terms and documentation
- Looking ahead to the future use of interest rate hedging strategies
Benefits
The panel will discuss these and other key issues:
- Under what circumstances are interest rate hedges appropriate in a transaction?
- When should an interest rate cap be used over a swap and vice versa?
- What are some key terms to consider in hedge documentation from the perspective of borrowers and lenders?
- How do existing financings and intercreditor agreements impact hedge agreements?
Faculty
Chrys A. Carey
Of Counsel
Morrison & Foerster
Mr. Carey represents clients in a wide variety of derivatives transactions and advises them on derivatives regulatory... | Read More
Mr. Carey represents clients in a wide variety of derivatives transactions and advises them on derivatives regulatory and compliance issues. His clients include investment companies, hedge funds, foreign and domestic banks, central banks, multilateral development banks and corporate end-users. Mr. Carey negotiates ISDA Master Agreements and other trading documents, including prime brokerage documents, clearing and execution agreements and related collateral arrangements. He also advises his clients on a broad array of derivatives regulatory issues arising under the Commodity Exchange Act and the rules and regulations of the Commodity Futures Trading Commission.
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Scott L. Diamond
Of Counsel
Ballard Spahr
Mr. Diamond is a capital markets lawyer with decades of experience in financial services and as lead attorney in... | Read More
Mr. Diamond is a capital markets lawyer with decades of experience in financial services and as lead attorney in regulatory matters, transactions and litigations. He co-leads the firm's Derivatives, Structured Products, and Secondary Markets team. Mr. Diamond’s practice focuses on complex transactional matters involving derivatives and securities, compliance, swaps, foreign exchange, agricultural commodities, metals, digital assets and non-linear products. He represents institutions in tax-exempt and taxable secondary market structures and collateralization. His practice encompasses complex structured products such as tax-exempt energy prepay transactions, total return swaps as synthetic loans and guarantees, tender option bonds and matters involving swap dealers, broker-dealers, introducing brokers, derivatives transactions and regulation. Mr. Diamond also has deep understanding of the derivatives and securities clearing process as well as FINRA and NFA rules and the intersection of securities, derivatives and identified banking products. He is a former Head of Investment Banking - Legal for a large multinational bank and has a wealth of derivatives, securities and banking experience.
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