Good evening, Sir.
As I am not good in SWAP, could Sir kindly explain why Buryecs Co paid BR+0.6% instead of BR+0.4%?
I would appreciate if Sir is willing to allocate your time on answering this question.
Thanks and Regards.
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Buryecs Co's bank rate payment
4y ago#1They don't :-)
If Buryecs were to borrow fixed and the counterparty borrowed floating then in total they would be paying 4% + (BR + 0.4%) = BR + 4.4%
If Buryecs were to borrow floating and the counterpart borrowed fixed, then in total they would be paying (BR + 0.6%) + 5.8% = BR + 6.4%
So what they should do is for Buryecs to borrow fixed and the counterpart borrow floating, which would save a total of 2% (before bank charges) and then swap so that each pays the othersinterest.
Have you watched my free lectures on swaps?
Sorry Sir, this is the first time I am using this website. Since your lectures on SWAP is available. I will check it out now.
Thanks and stay safe.
4y ago#3You are welcome :-)
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