Doing nothing is the most defensible trade in treasury. Hedge and get it wrong, and the loss has your name on it. Do nothing and get it wrong, and the market moved.
A loss on a hedge is visible and attributable. The cost of not hedging dissolves into market conditions. The two choices are not symmetrical for the person making them.
That is why the window before a refinancing or an issuance so often sits unmanaged.
The answer is a hedging framework approved by the board in advance, with triggers, sizes and instruments pre-set.
Why the window before a deal sits unmanaged
That asymmetry is why the window before a refinancing or an issuance so often sits unmanaged. Hedge ahead of the deal and rates fall, and the mark-to-market shows up in every review with a number, a date and a signature attached, while the money the same decision would have saved in the other scenario never appears anywhere. Leave the exposure open and rates rise, and the cost dissolves into market conditions, which are nobody's fault. One outcome is attributable and the other is invisible, so the choices are not symmetrical for the person making them.
None of this makes the treasurer wrong. A team judged with hindsight on visible losses is responding rationally to the incentives in front of it, and expecting individuals to carry that career risk out of conviction is not a strategy.
The answer is a framework, agreed in advance
The answer is structural. A hedging framework approved by the board in advance, with triggers, sizes and instruments pre-set, changes what the decision is. Treasury stops taking a personal view on rates and starts executing an agreed policy, and the mark-to-market belongs to a framework the board signed, not to the individual who transacted on the day. The same trade that was a career bet becomes a matter of doing the job.
Rate exposure ahead of a deal does not go unmanaged because nobody sees it. It goes unmanaged because, as things are usually set up, owning it costs more than ignoring it.
First published as a LinkedIn post on 6 July 2026. Read and comment on LinkedIn.