METHODS OF DEBT MANAGEMENT UNDER THE CONDITIONS OF HIGH VOLATILITY OF INTEREST RATES

UDC 336.02
DOI: 10.36871/ek.up.p.r.2022.01.01.014

Authors

Maxim A. Pershin
National Research University Higher School of Economics, Moscow, Russia

Abstract

Volatility of interest rates is a factor that can negatively affect debt service costs and refinancing risks. In this article we propose measures and instruments that can help to decrease negative effects for debt portfolio management caused by interest rates volatility. These measures include employment of bonds with floating coupon rates, bonds with indexed principal value, bonds with call options as well as hedging by derivatives. Implementation of suggested measures can help to keep costs of debt relatively stable and sustain refinancing risks at acceptable level.

Keywords

debt portfolio management, volatility of interest rates, hedging interest rate risk.