How property companies are increasingly using non-vanilla hedging structures to reduce their interest rate exposure

Abstract

This paper looks at how the use of interest rate derivatives by property companies has evolved in recent years, beyond the most basic. It is now commonplace for many of these companies to employ quite sophisticated hedging strategies. The authors present two hedging structures that would be classified as ‘non basic’ or to use the correct jargon ‘non vanilla’ and suggest that there is more innovation to come. Copyright © 2002 Henry Stewart Publications