A US company has $750 million loan priced at 6% fixed per annum for 10 years. The firm would like to swap its loan into 180 days Sterling floating through the intermediation of an investment bank that charges 20 basis points. The US Co could borrow Sterling floating at 4.50% and the UK Company could borrow $ fixed at 7.50%. Design a swap transaction that affords each company an equitable benefit.

Answer rating: 100% (QA)

To design a swap transaction that affords each company an equitable benefit we need to calculate the cash flows for each company under the existing lo... View the full answer