Fantra, a global soft-drink manufacturer has recently entered into a swap agreement with intermediary Lachlin Bank. Under this swap agreement Fantra agreed to make floating rate payments to Lachlin Bank, while Lachlin Bank would make fixed rate payments to Fantra. Lachlin Bank then closed their exposure by entering a matching swap with another soft-drink manufacturer, Cloak.

If in 6 months time the interest rates are such that the cash flow on the floating rate payments are less than the cash flows on the fixed rate payments, the value of the swap for Fantra will have increased/ decreased/ remained the same.The value of the swap Cloak entered with Lachlin bank, from Cloak's point of view, will have increased/ decreased/ remained the same.