Forward rate agreement - FRA

What is a forward rate agreement?

An FRA is a contract between the bank and the company that gives the company an agreed interest rate on loans and investments regardless of changes in the market rate. You agree on a fixed interest rate for a given period. The basis for determining the appropriate interest rate is the current market rate.

What is the benefit of signing an interest rate agreement?

Interest rate agreements (IR agreements) benefit companies that want to avoid uncertainty related to the annual renewal of loans with variable interest rates (NIBOR-based interest rate). By entering into an IR agreement, the company can set an upper limit for the interest rate on future loan renewals (excluding margin) and also a lower limit on planned investments. This creates predictability and allows you to focus on your main operations.

Why enter into an agreement with DNB Markets?

We are a market maker in every market and offer a full range of services on foreign exchange and interest rates. We offer FRAs and IR agreements in the vast majority of currencies, including NOK. IR agreements normally have a term of up to two years. Our Risk Advisory team assists customers in managing financial risk, focusing on fixed income, currency and commodity exposure

Would you like to learn more about fixed-income securities and currency hedging?

DNB markets offers corporate clients a variety of methods for hedging and eliminating currency risk. Contact us to find the right method for your business. We also offer courses and training in handling commodities, interest rates and currency risk.