Interest rate risk refers to the unexpected increase in financing costs caused by the fluctuation of interest rates. Of course, this is for forward loans, because the forward interest rate is uncertain and may rise. It may decrease. If it increases, the financing cost will also increase. If it decreases, the financing cost will decrease. Everyone is happy to see the decrease, but this is uncertain. Usually we only require a fixed financing cost. Sudden highs and lows are not good for a company's capital operation and budget. For this reason, forward agreements were born!

For example, it is June 1st now, and Company A needs to borrow a sum of funds three months later (September 1st to December 1st). According to the spot interest rate, which is June 1st, The bank loan interest rate today is 6%, but the interest rate three months later may not be 6%. If it is higher than 6%, then Company A will pay more costs. In order to avoid this happening, it will Financing costs are fixed within a controllable range. They will sign a forward interest rate agreement, and with whom? Of course, they are people (collectives, companies or legal persons) who predict that interest rates will fall. These people subjectively believe that interest rates will fall. They want to take advantage of this opportunity to make a fortune, so they will sell a forward interest rate agreement. Such a thought Someone who buys something and wants to sell it will be matched. The specific mechanism is as follows:

For example, Party A wants to borrow 1 million yuan from the bank after three months, with a term of six months. The seed is RMB. In order to offset the interest rate risk, A purchased a forward interest rate agreement on June 1 (the trading date). For example, the 3 in 3×6 (an agreement) represents three months from now. That is, until September 1st (settlement date: the date when interest starts to be calculated), 6 means six months from now, which is December 1st (maturity date: the date on which the forward interest rate agreement terminates), which It means that the period of the forward interest rate agreement is three months from September 1st to December 1st (contract period).

Interest will be calculated and delivered (in the form of discount) on September 1st. At this time, the interest spread will be calculated based on the previously negotiated reference interest rate. If the reference interest rate is determined to be 6.2%, Party A will need to obtain the loan from the entity. The overpayment of interest (1 million × 0.2% × 6 ÷ 12 = 1,000 yuan). However, since this is also the expiration date of the forward agreement, according to the provisions of the agreement, the interest rate has increased, and the seller of the agreement needs to pay the interest difference to the buyer, that is, (1 million × 0.2% × 6 ÷ 12 = 1,000 yuan), so the extra 1,000 yuan that Company A paid for the physical loan can be made up for in the forward interest rate agreement, which is equivalent to controlling the loan interest rate at Company A The desired interest rate is 6%;

On the contrary, if the reference interest rate drops to 5.8%, then Company A will pay less than their budgeted financing cost (100) when borrowing from the bank on December 1 Ten thousand × 0.2% × 6 ÷ 12 = 1,000 yuan), but they will not really get this 1,000 yuan, because Company A is the buyer of the interest rate in the forward interest rate agreement. Since the interest rate drops, Company A needs to pay interest to the interest rate seller. The difference is (1 million × 0.2% × 6 ÷ 12 = 1,000 yuan). In this way, for Company A, their actual loan interest rate is still 6%, which is consistent with what they want to pay, and achieves the goal of preventing risks and controlling costs. Purpose!

(Let’s briefly talk about the interest rate difference between the buyer and seller of the agreement. It can be regarded as a liquidation measure during speculative transactions in the futures market. For example, the seller of the interest rate agreement sells a contract. , they subjectively believe that the forward interest rate will fall. If they sell at a high interest rate now, they can buy it back at a low interest rate in the future, so that they can earn an interest difference. However, the buyers of the forward interest rate agreement have the opposite idea. They believe that the forward interest rate will fall. The interest rate level will rise in the future, so they buy now and sell in the future to obtain the interest rate difference. Then it will be clear who will pay whom. If the interest rate drops in the future, then the seller of the interest rate will make money. Where does the money come from? Of course, the interest rate is paid by the buyer. The total amount of the transaction is only nominal, and there is no flow of physical currency. But at the end of the agreement, the party paying the interest difference must give physical currency. On the contrary, when the interest rate rises, the seller pays. Spread to buyer)