Treasury Lock

Maybe you’re more of a bond gal (not to be confused with a Bond girl) than a stock guy. We get it. Lots of businesses like to have a certain percentage of bonds on hand, too.

However, variable bond interest rates can make coupon payments better on some days than others. And when you’re a business depending on regular payouts, well...you’d prefer regularity, so you can make your plans and pay for them.

That’s when businesses buy a Treasury lock: an additional security that hedges against changing interest rates, offering regular payouts on your bonds. This allows businesses to lock in current interest rates via a custom derivative that promises a fixed yield between the derivative and your bonds.

How long can you have the current market rate on lockdown? Anywhere from one week to one year. The best part? There are no upfront costs to get a Treasury lock, since they’re embedded into the yield of the security. If interest rates go up and you’re locked in at a lower rate...sorry, bro. But hey, that’s the price to pay for some stability.