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?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Corporate Finance

ISBN: 9781260772388

13th Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

Question Posted: