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Business, 31.03.2020 01:05 kamkam5791

Company A, a low-rated firm, desires a fixed-rate, long-term loan. A currently has access to floating interest rate funds at a margin of 0.5% over LIBOR. Its direct borrowing cost is 13% in the fixed-rate bond market. In contrast, company B, which prefers a floating-rate loan, has access to fixed-rate funds in the Eurodollar bond market at 11% and floating rate funds al LIBOR + 1.5% How can A and B use a swap to advantage?

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Company A, a low-rated firm, desires a fixed-rate, long-term loan. A currently has access to floatin...
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