Fixed-Rate vs. Floating-Rate Companies: Why Interest Costs Don’t Rise Immediately After Rate Hikes
Fixed-rate vs floating-rate debt determines how quickly a company’s borrowing costs respond to interest rate hikes. Companies with fixed-rate bonds may keep paying the same coupon for years, while floating-rate borrowers can experience an increase in corporate interest expense much sooner. In practice, that rarely happens. A higher policy rate affects companies at different speeds … Read more