The following excerpt was taken from the annual report of Bristol-Myers Squibb, a leader in pharmaceutical and health care products.
Derivative financial instruments are used principally in the management of its interest rate . exposures . the company has entered into fixed to floating interest rate swaps for $3.9 billion of its long-term debt . in conjunction with the new issuance of $1.25 billion 5.89%. Notes . the company executed several fixed to floating interest rate swaps to convert the fixed rate debt . to variable rate debt.
Required:
Explain the meaning of this footnote, and why a company would enter into an interest rate swap.