Interest rate guarantee

(IRG).

This is an option on a specified short-term interest rate for a specified notional loan or deposit.

A borrower normally wants a guarantee that their hedged rate payable will be 'no higher than' a specified worst case rate.

A lender or investor normally wants a guarantee that their hedged rate receivable will be 'no less than' a specified worst case rate.

See also

• Hedging
• Interest rate
• Interest rate option
• Option