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Is Debt Readily Available? How To Lock-In Rates Today Robert Keith The C.I.R.M. Chicago, Illinois October 27, 2011 CIRM CI...
How Low is 1-Month LIBOR Now? The Corporation for Interest Rate Management CIRM Robert Keith (312) 332 2363 [email_address...
Have 10-Year Treasury Rates Ever Been Lower?  The Corporation for Interest Rate Management CIRM Robert Keith (312) 332 236...
Remember, the Pendulum Swings Both Ways The Corporation for Interest Rate Management CIRM Robert Keith (312) 332 2363 [ema...
How to Exploit Today ’s Low Rates? The Corporation for Interest Rate Management Forward 3-month LIBOR Curve CIRM Robert Ke...
Your First Instinct May Be to Swap… The Corporation for Interest Rate Management CIRM Robert Keith (312) 332 2363 [email_a...
… but Swaps are Surprisingly Expensive The Corporation for Interest Rate Management <ul><li>Example: $20 MM  loan Capped v...
Interest Rate Swap = Fixed Rate From Day 1 The Corporation for Interest Rate Management Example 1 .50% Swap 3 year swap ra...
Interest Rate Cap = Protecting the Worst Case While Enjoying the Best Case The Corporation for Interest Rate Management CI...
Hedging the Permanent Loan During Construction can be Expensive The Corporation for Interest Rate Management CIRM Robert K...
Fixing Forward Today is  not  Fixing Today ’s Rate The Corporation for Interest Rate Management CIRM Robert Keith (312) 33...
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Is Debt Readily Available? How to Lock in Rates Today (Robert Keith) - ULI fall meeting - 102711

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Is Debt Readily Available? How to Lock in Rates Today (Robert Keith) - ULI fall meeting - 102711

  1. 1. Is Debt Readily Available? How To Lock-In Rates Today Robert Keith The C.I.R.M. Chicago, Illinois October 27, 2011 CIRM CIRM Robert Keith (312) 332 2363 [email_address] ©2011 The CIRM
  2. 2. How Low is 1-Month LIBOR Now? The Corporation for Interest Rate Management CIRM Robert Keith (312) 332 2363 [email_address] ©2011 The CIRM Page
  3. 3. Have 10-Year Treasury Rates Ever Been Lower? The Corporation for Interest Rate Management CIRM Robert Keith (312) 332 2363 [email_address] ©2011 The CIRM Page
  4. 4. Remember, the Pendulum Swings Both Ways The Corporation for Interest Rate Management CIRM Robert Keith (312) 332 2363 [email_address] ©2011 The CIRM Page
  5. 5. How to Exploit Today ’s Low Rates? The Corporation for Interest Rate Management Forward 3-month LIBOR Curve CIRM Robert Keith (312) 332 2363 [email_address] ©2011 The CIRM Page
  6. 6. Your First Instinct May Be to Swap… The Corporation for Interest Rate Management CIRM Robert Keith (312) 332 2363 [email_address] ©2011 The CIRM Page Interest Rate Indications Monday, October 17, 2011 LIBOR Caps (basis points upfront — not per annum) *   Interest Rate Swaps Strike 1-Year 2-Year 3-Year Term Rate (act/360) ** 1.00% 7 25 77 1-year 0.65% 1.25% 5 21 65 2-year 0.75% 1.50% 4 18 56 3-year 0.97% 1.75% 3 16 49 4-Year 1.25% 2.00% 3 14 42 5-year 1.55% 2.25% 2 13 37 7-year 2.05% 2.50% 2 11 33 10-year 2.53% 2.75% 1 10 29 3.00% 1 9 26 4.00% 1 6 18 1- Month LIBOR 24 bps * 1-month LIBOR index; theoretical mid-market values; generally subject to a minimum fixed charge ; premium payable in 2 business days ** 1-month LIBOR index
  7. 7. … but Swaps are Surprisingly Expensive The Corporation for Interest Rate Management <ul><li>Example: $20 MM loan Capped vs. Swapped at 1% </li></ul>Cap Strategy Saves $302,000! This is just the beginning of your rate optimization strategy. CIRM Robert Keith (312) 332 2363 [email_address] ©2011 The CIRM Page
  8. 8. Interest Rate Swap = Fixed Rate From Day 1 The Corporation for Interest Rate Management Example 1 .50% Swap 3 year swap rate CIRM Robert Keith (312) 332 2363 [email_address] ©2011 The CIRM Page
  9. 9. Interest Rate Cap = Protecting the Worst Case While Enjoying the Best Case The Corporation for Interest Rate Management CIRM Robert Keith (312) 332 2363 [email_address] ©2011 The CIRM Page “ in the money” Example 2% Cap
  10. 10. Hedging the Permanent Loan During Construction can be Expensive The Corporation for Interest Rate Management CIRM Robert Keith (312) 332 2363 [email_address] ©2011 The CIRM Page
  11. 11. Fixing Forward Today is not Fixing Today ’s Rate The Corporation for Interest Rate Management CIRM Robert Keith (312) 332 2363 [email_address] ©2011 The CIRM Page

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