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DYNEX DEBT RISK MANAGEMENTBorrowing can become an advantageous business if loan balances can be reduced through interest rate reduction and/or dynamic switching to weaker currencies. Interest rates for different currencies vary greatly. Switching loan balances into low interest rate currencies can reduce the interest burden. Switching loan balances into currencies that fall against the original loan currency can also reduce the loan burden. DynexCorp uses a combination of both to achieve benefits for the borrower. Debt risk management is suitable for loans in medium to high interest rate currencies if they can be paid back in low-interest rate currencies. During an era of generally low interest rates only loans taken out in liquid higher interest rate currencies (such as currently AUD, NZD, ZAR etc) benefit from debt risk management. |
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