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Goodrich and Libor

Autor:   •  March 8, 2016  •  Research Paper  •  531 Words (3 Pages)  •  767 Views

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Goodrich in interested in a floating rate debt issue tied to LIBOR and entering a swap interest payment agreement with a European bank as such debt is perceived to have many potential buyers. As for Rabobank, it would rather have a fixed rate Eurobond issue with swapping interest payment with U.S. corporates. Since Rabobank pays its debt LIBOR – x, which should be less than floating rate LIBOR + 0.25%, Rabobank benefits from the swap if the discount rate (x) is greater than -0.25%: LIBOR + x < LIBOR +0.25%  x > -0.25%. On the other hand, to make the swap deal attractive for BF Goodrich,

Goodrich in interested in a floating rate debt issue tied to LIBOR and entering a swap interest payment agreement with a European bank as such debt is perceived to have many potential buyers. As for Rabobank, it would rather have a fixed rate Eurobond issue with swapping interest payment with U.S. corporates. Since Rabobank pays its debt LIBOR – x, which should be less than floating rate LIBOR + 0.25%, Rabobank benefits from the swap if the discount rate (x) is greater than -0.25%: LIBOR + x < LIBOR +0.25%  x > -0.25%. On the other hand, to make the swap deal attractive for BF Goodrich,Goodrich in interested in a floating rate debt issue tied to LIBOR and entering a swap interest payment agreement with a European bank as such debt is perceived to have many potential buyers. As for Rabobank, it would rather have a fixed rate Eurobond issue with swapping interest payment with U.S. corporates. Since Rabobank pays its debt LIBOR – x, which should be less than floating rate LIBOR + 0.25%, Rabobank benefits from the swap if the discount rate (x) is greater than -0.25%: LIBOR + x < LIBOR +0.25%  x > -0.25%. On the other hand, to make the swap deal attractive for BF Goodrich,Goodrich in interested in a floating rate debt issue tied to LIBOR and entering a swap interest payment agreement with a European bank as such debt is perceived to have many potential

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