Swaps Borderline Agriculture, a distributor of food and food-related products to emerging markets, has announced it has

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Swaps Borderline Agriculture, a distributor of food and food-related products to emerging markets, has announced it has signed an interest rate swap. The interest rate swap effectively converts the company’s €100 million, 6.9 per cent interest rate bonds for a variable-rate payment, which is the six-month EURIBOR plus 0.26 per cent. Why would Borderline Agriculture use a swap agreement? In other words, why doesn’t Borderline Agriculture just go ahead and issue floating-rate bonds, because the net effect of issuing fixed-rate bonds and then doing a swap is to create a variable-rate bond?

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