Little Prince (LP) has 100 million Brazilian reals (BRL) of 2-year fixed rate debt with a bond
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Little Prince (LP) has 100 million Brazilian reals (BRL) of 2-year fixed rate debt with a bond equivalent yield of 8.25 percent compounded semiannually. LP prefers floating rate BRL debt, and the market is asking LIBOR + 100 bps. A swap pricing schedule is shown below for a 2-year fixed-for-floating coupon swap. Describe LP’s side of the swap.
This schedule assumes nonamortizing debt and semiannual rates (sa). Quotes are against 6-month LIBOR BRL flat. TN = Brazilian Treasury Note rate.
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