Acme Corporation $$1,000,000,000$ Term Debt $($Fixed$)$

Acme Corporation enters into a $5-$year term loan with JP Morgan bank on January $1,2020.$ JP Morgan is the lead with $40\%$ and has syndicated the remaining $60\%$ with PNC$,$ Wells Fargo and Deutsche at $20\%$ Each. Loan interest is calculated quarterly and is a fixed $6\%$ plus a spread, which is based on the company's credit rating. The spread ranges from $300BPS$ to $400BPS.$ If Acme is rated BBB$+$ or better, the spread is $300BPS.$ If it is rated less than BBB$+,$ the spread is $400$ BPS$.$ Loan interest is calculated ACT$/360$ with the first payment due $\frac{3}{31}\frac{?}{2020}$ and subsequent quarterly payments on the last day of each quarter. Principal payments are based on the follow schedule:

$$50,000,000$ due $6$ months post inception

$$100,000,000$ due $12$ months post inception

$$200,000,000$ due $24$ months post inception

$$250,000,000$ due $48$ months post inception

$$400,000,000$ due $60$ months post inception

$$1,000,000,000$ Total

$3-$month Term SOFR and Acme's credit ratings are as follows $($Note that $3-$month Term SOFR is prospective$).$

$\frac{1}{1}\frac{?}{2020}=5\%$; Credit rating $=$ BBB $+$

$\frac{3}{31}\frac{?}{2020}=4\mathrm{.}5\%$; Credit rating $=$ BBB $+$

$\frac{6}{30}\frac{?}{2020}=4\%$; Credit rating $=$ BBB

$\frac{9}{30}\frac{?}{2020}=3\mathrm{.}5\%$; Credit rating $=$ BBB$-$

$\frac{12}{31}\frac{?}{2020}=4\mathrm{.}0\%$; Credit rating $=$ BBB$-$

$3$ month LIBOR is projected to decrease, so if you're bearish on interest rates, you'd enter into a fixed to floating rate interest swap. Interest rate and principal payments are made to JPM as lead and syndicated to Wells, PNC and Deutsche. Acme's spread changes with the credit rating. First principal payment is due in $6$ months from $\frac{1}{1}\frac{?}{2020}.$ Underlying calculation changes, as well as the amortizing notional swap.

Swap

On $\frac{1}{1}\frac{?}{2020},$ concurrent with the execution of the Term Debt, you enter into a $$1,000,000,000$ amortizing notional fixed$-$for$-$floating interest rate swap with KeyBank and the swap term begins the same day. Your mid$-$market $3-$month Term SOFR floating rate is $5\mathrm{.}0\%,$ and the first swap transaction using this rate will occur on $\frac{3}{31}\frac{?}{2020}.$

Calculate the debt service $($principal and interest$)$ for the underlying term loan for the following dates. Please calculate the pro rate debt service amount due each bank participating in the syndication.

a$.\frac{3}{31}\frac{?}{2020}$

b$.\frac{6}{30}\frac{?}{2020}$

c$.\frac{9}{30}\frac{?}{2020}$

d$.\frac{12}{31}\frac{?}{2020}$

Calculate the swap fixed and floating cash flows that Acme owes Key and Key owes Acme for the following dates:

a$.\frac{3}{31}\frac{?}{2020}$

b$.\frac{6}{30}\frac{?}{2020}$

c$.\frac{9}{30}\frac{?}{2020}$

d$.\frac{12}{31}\frac{?}{2020}$