IRS motivation, again

For an issuer to borrow $100M, the floating rate is typically lower than the fixed rate that's available from a regular bond issue.

Some “fixed” bond issuers actually want a floating interest cost, which is typically cheaper. IRS is a simpler route than the VRDO with the remarketing agent and letter of credit.

“Major issuers evaluate the swap market and the bond market side by side” as 2 alternatives.

Cast of characters
* issuer, like IBM
* swap provider, like GS
* investor, like grandma.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s