Deutsche Bank has closed the largest Islamic profit-rate collar to date, for Dubai Islamic Bank.
The $500 million swap includes a cap-and-floor structure, which refines the ability to hedge underlying rate exposures within a range. Traditional Islamic profit-rate swaps combine both fixed- and floating-rate Shariah-compliant instruments to replicate a fixed/floating interest rate swap. The floating element is reset periodically against a benchmark.
Deutsche refused to reveal the benchmark, or the