Swaps In May 2004, Sysco Corporation, the distributor of food and food-related products (not to be confused
Question:
Swaps In May 2004, Sysco Corporation, the distributor of food and food-related products
(not to be confused with Cisco Systems), announced it had signed an interest rate swap. The interest rate swap effectively converted the company’s $100 million, 4.6 percent interest rate bonds for a variable rate payment, which would be the six-month LIBOR minus 0.52 percent.
Why would Sysco use a swap agreement? In other words, why didn’t Sysco just go ahead and issue fl oating-rate bonds because the net effect of issuing fi xed-rate bonds and then doing a swap is to create a variable rate bond?
LO.1
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Question Posted: