Negative carry presents corporate hedging conundrum

Christopher Whittall
29 Mar 2010

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The steepness of interest rate yield curves for the dollar, euro and sterling has left many corporates contemplating swapping appropriate portions of their liability portfolio from fixed to floating rates.

Corporates rushed out to fund and pre-fund liabilities in 2009 as fears over liquidity risk permeated the market. At the time, the historically low fixed rates provided attractive funding opportunities. However, a sustained period of low rates has meant many corporates have negative carry

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