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Investment Banking > Structured Products > Interest Rate Collar

  • Interest Rate Collar

    This is a combination of an Interest Rate Cap and an Interest Rate Floor. In a collar agreement, the issuer purchases an interest rate cap that offers protection against variable rate fluctuations above the cap rate and sells an interest rate floor that prevents the issuer of taking advantage of variable rates below the floor level. A collar can be structured so that the issuers pays zero premium for the interest rate protection.

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