Derivatives Facility

To help you efficiently manage the risk of your overall investment position, Liquidity Management has developed our Derivatives Facility product.

This product allows you to manage your Interest Rate Risk by having access to the professional Interest Rate Swap market. The Derivatives Facility product offers you some of the following benefits:

• The Facility may be used, for example, to hedge risks created by the exposure of a housing loan portfolio (which could receive interest payments at a fixed rate) whilst being funded at a floating rate. It thus creates an exposure to rising interest rates.
• By using Cuscal's Derivative Facility, the risk could be offset by swapping the fixed rate payments from the loan portfolio into a floating rate interest stream.
• Because our floating rates are determined with reference to BBSW, plus an agreed margin (and because BBSW reflects current market rates), your stream of interest payments will reflect the movements in market rates.

The Derivatives Facility is a valuable and useful tool allowing you to minimise interest rate risk with the added benefit of “locking in” margin.