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Johnson & Johnson ( JJ ) , U . S . has a AAA credit rating. Apple debt is rated AA and hence faces higher

Johnson & Johnson (JJ), U.S. has a AAA credit rating. Apple debt is rated AA and hence faces higher interest rates. Both firms wish to raise $25 million for 5 years; JJ is willing to borrow at a floating rate but will not do a swap unless a floating rate of SOFR +15 BP or better can be obtained. JJ would also go for the swap if they could borrow fixed at 7.90%. Apple wants a fixed rate but cannot afford the 8.35% cost; Apple is willing to do the swap if they could get 8.10% fixed, or they would go floating if the variable rate cost could be lowered to SOFR +120. For simplicity, ignore any swap fees.
You are the Citicorp banker, CLEARLY set up the swap deal; inside the arrows indicate the swap payments, whether they are fixed or floating and at what rate; in the square boxes below indicate what JJ and Apple borrow at in the external debt markets then show Citicorps profit in dollars. Citicorp MUST make a positive net profit and not be at risk if rates move.

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