Corporate Finance Explained | Interest Rate Risk Management

What happens when interest rates rise faster than your business can adapt? In this episode of Corporate Finance Explained, we break down one of the most overlooked risks in corporate finance: interest rate risk management. Using real-world examples from the 2022-2023 rate hiking cycle, we explore how treasury teams protect companies from rising borrowing costs, why some businesses weathered higher rates while others struggled, and the financial strategies that separate disciplined risk management from dangerous speculation. You'll learn how companies manage fixed vs. floating rate debt, how interest rate swaps, caps, collars, and forward-starting swaps work, and why matching financing structures to business cash flows is more important than trying to predict where interest rates are headed. We also examine real-world examples from Ford, regulated utilities, leveraged buyouts (LBOs), and commercial real estate to show how interest rate decisions impact financial performance. In this episode, you'll learn: • How fixed-rate and floating-rate debt affect a company's financial risk • How interest rate swaps allow companies to manage borrowing costs • What interest rate caps, collars, and forward-starting swaps are used for • Why treasury teams focus on matching debt structures to business cash flows • How regulated utilities protected themselves before the 2022 rate hikes • What went wrong for many leveraged buyouts and commercial real estate borrowers • How CFOs measure earnings at risk and determine the right hedge ratio Whether you're studying corporate finance, FP&A, treasury management, financial modeling, investment banking, risk management, or capital markets, this episode provides a practical framework for understanding how companies manage one of the biggest risks on their balance sheet. Explore CFI's courses and certifications in corporate finance, financial modeling, and treasury management: https://cfi.to/urx0q Listen to more Corporate Finance Explained episodes on FinPod: https://cfi.to/urx0r #CorporateFinance #TreasuryManagement #InterestRates #RiskManagement #FinancialModeling #FPandA #CapitalMarkets #InvestmentBanking #Finance #CFI