Interest Rate Option Cap (IRO CAP)

Solutions for hedging against increasing interest rated at pre determine rate

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Anticipation of interest rate fluctuations

Protection

Protected against upward interest rate movements above the Cap Strike while participating in downward interest rate movement

Alternative hedging product

An alternative hedging product to protect customer against rising interest rates. Customers get protection on (loan) interest payment (if interest rate rise)

    Interest and Fee

    Other Information

    Terms & Conditions

    Disclaimer

There is no fees or additional cost charged to customer, outside of transaction

Product Simulation:

Product Simulation

Deal Illustration - Cap:

  • Notional: USD 10mio (Bullet repayment)
  • Start Date: 21 Sep 2018
  • Maturity Date: 21 Sep 2020
  • Cap Buyer: Client
  • Cap Seller: Bank
  • Cap Strike Rate: 3.00%
  • Floating Rate Ref: 3m LIBOR
  • Premium: USD 3,500
  • Premium Payment Date: SPOT (25 Sep 2018)
  • Interest Payment Date: Every 21 Mar, Jun, Sep, Dec, starting from 21 Dec 18 up to maturity date, subject to business day convention
  • Interest Fixing Rate: 2 business day prior to Interest Payment Date
  • Interest Payment:
    1. If the Floating Rate fixes below the Cap Strike Rate, there will be no settlement between the Cap Seller and Cap Buyer on the relevant Payment Date;
    2. If the Floating Rate fixes at or above the Cap Strike Rate, the Cap Seller will transfer to the Cap Buyer on the relevant Payment Date, an amount determined by the Calculation Agent as follows:

      Notional Amount x (Floating Rate –Cap Strike Rate) x Day Count Fraction

Risk Product and Other Information:

  1. Market Risk
    • Risk arises from volatility and fluctuation or movement of interest rate
    • Risk that arises if a customer unwind an Interest Rate Option position
  2. Credit Risk
    Risks that arise if a customer is unable to meet his obligations in accordance with the facilities provided.
  3. Liquidity Risk
    Risk arise at maturity / installment loan schedule where there is an Interet rate hedging option. However, this risk is minimum because (if any) settlement is done by netting

Facility:

Transaction can only be performed with Treasury Advisory or through contact with Relationship Manager (RM) for more information related to this product

Complaint Mechanism

Customers can submit complaints related to products through:

  1. Call Tanya OCBC NISP di 1500 – 999 (domestic call) atau 021-26506300 (overseas call)
  2. Contact Relationship Manager (RM)
  3. Email to tanya@ocbcnisp.com

Terms and Condition

  1. Customer must sign ISDA Agreement and ISDA Schedule Agreement as per agreed with Bank OCBC NISP or other legal form of agreement
  2. Customer must have limit to do IRO which will be given by Relationship Manager
  1. You hereby acknowledge that you have read, received explanation and understood the product and/or service as specified in this Summary of Product and/or Service Information (“Summary”) and have informed, understood and accepted any consequences of product and/or service including all inherent benefits, risks and costs.
  2. This Summary is intended only as an information and does not aim to be a basis for investment decisions. Past performance is not an indication of future performance. Any proposal documents for investment related products, must be studied further. Any projections, opinions or other statistical facts displayed in this information are only an indication and are not guaranteed in any form. You must determine your own decisions in accordance with the needs and investment strategies by considering legal, tax and accounting issues. Based on good intentions and moral responsibility, Bank OCBC NISP and each of its employees are not responsible for any direct or indirect losses, or as a consequence arising from the use of and dependence on this information in an investment decision.
  3. Bank OCBC NISP reserves the right to reject your product and/or service application if it does not fulfil the requirements and the application of laws and regulations.
  4. You have to carefully read this Summary and contact Bank OCBC NISP if there are further queries in respect of the product and/or service contained in this Summary.
  5. This Summary has been adjusted to be in accordance with the provisions of regulations including the regulations of Financial Service Authority.

This Summary is made in English and Bahasa Indonesia, and in the event of inconsistency between the version, Bahasa Indonesia shall prevail.

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Solutions for hedging against increasing interest rated at pre determine rate

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