In September 2020, Unilever and JP Morgan entered into a $500 million 10-year swap, the first swap
Question:
In September 2020, Unilever and JP Morgan entered into a $500 million 10-year swap, the first swap to use SOFR as the reference interest rate. The interest rate swap effectively converted $500 million of fixed-rate debt for a floating rate based on SOFR. Why would Unilever use a swap agreement? In other words, why didn’t the company go ahead and issue floating-rate bonds since the net effect of issuing fixed-rate bonds and then doing a swap is to create a floating-rate bond?
Step by Step Answer:
The company must have felt that the combination of ...View the full answer
Corporate Finance
ISBN: 9781260772388
13th Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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Interest, debt, finance, and capital markets are all important concepts in the world of economics and business. Interest is the cost of borrowing money, and it is typically expressed as a percentage of the amount borrowed. Debt is the money that is borrowed, and it has to be repaid with interest. Finance is the study of how individuals, companies, and organizations manage their money and investments. Capital markets are the places where companies and governments can raise money by selling stocks and bonds to investors. These markets play an important role in the overall economy by helping to fund investment and growth.
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