Publications
Publications
- February 1994 (Revised February 1996)
- HBS Case Collection
Union Carbide Corporation: Interest Rate Risk Management
By: Peter Tufano
Abstract
Union Carbide's board of directors is asked to evaluate a proposal from the staff treasurer's that would articulate policies to manage its debt portfolio. The staff proposes that shareholder value will be maximized if the firm manages its exposure to interest rates by matching the duration of its liabilities to that of its assets. Based on statistical analysis, examination of rivals' policies, and reasoning, they argue that the firm, establish a benchmark duration for its liabilities against which all future active management activities be measured.
Keywords
Citation
Tufano, Peter, and Jon Headley. "Union Carbide Corporation: Interest Rate Risk Management." Harvard Business School Case 294-057, February 1994. (Revised February 1996.)