Chapter 27 - Swap Agreements
431 Paragraph 3.
The differences between the payment amounts go to the intermediary. The dollar payment is paid by Airlease. On a principal of $9 million Airlease must pay 6.3% and Boeing receives 5.0%. The remaining 1.3% goes to the intermediary. The euro payment is paid by Boeing. On a principal of 10 million Boeing must pay 11.90% and Airlease receives 13.00%. The 1.1% difference must be made up by the intermediary.
431 Table 27-5
Under Intermediary:
interest payment of swap: 1.1% * 10m
431 27-2 B
... and Busey pays T-Bill plus 0.50%.
436 27-4
Johnson & Johnson (JNJ), rated AAA, can borrow in the USA bond market at 5% and in the European Bond Market 8.6% The Ford Motor Company (F), rated A, can borrow in the USA bond market at 7% and in the European Bond Market at 9.0%. Johnson & Johnson requires 10m over ten years and Ford requires $9m over ten years. The current rate of exchange is 1=$0.90