The current interest swap rates quoted by dealers are shown in the table

Your firm currently has a €400 million five-year floating rate loan obligation paying 230 basis points over LIBOR. Currently, euro three-month LIBOR stands at 2.60 per cent. It also has a four-year £230 million fixed rate loan at 6.2 per cent per annum. 

It would suit its cash flows and risk profile better if the euro loan was swapped into a fixed rate obligation and the sterling obligation was swapped into a floating rate obligation. Describe how the company could achieve these objectives using the prices quoted in the table which have been obtained from swap market intermediaries. 

Note: the rates in the table are for AAA rated banks; your firm will have to pay 20 basis points over these rates given its greater counterparty risk.

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Euro- % Stlg.% Bid Offer Bid Offer 1 year 2.70 2.75 3.50 3.55 2 years 3.10 3.15 3.67 3.72 3 years 3.78 3.83 4.01 4.06 4 years 4.20 4.25 4.56 4.61 5 years 4.32 4.37 4.78 4.83