"The pricing of a debt instrument can work out to the borrower's advantage, only if the interest payable on a floating-rate basis works out cheaper than that on fixed-rate liabilities," Subramaniam said, adding: "Suppose a corporate swaps its fixed-rate liabilities for a floating rate pegged to the overnight interest rates... the swap will be viable only when the overnight rates remain lower than interest rate payable for fixed liabilities".

He was of the view that if the maturity of the swap extends to say five years, there is obviously a chance that the overnight interest rates may be more than the interest rate on fixed liabilities at certain times.

On the foreign exchange market, Subramaniam said that forward premiums still continued to reflect the market's perception of the future value of the rupee at a given point of time. "The forward premiums is not indicative of spot rupee in the future, but merely reflects where the market views it," he said.

"There have been times when the market expects the rupee to be stable and leave their exposures uncovered. They have suffered losses, when the rupee turned volatile," he noted.

While opting for risk management, customers and suppliers look for long term viability of the strategy utilised. "On the other hand, the management, wants to minimise the cost of capital, while creditors focus on cash flows and credit dilution," he said.