Part $2$:

A U$.$S Bank with a AA rating and U$.$S dollar assets can borrow U$.$S dollars in the interbank market at SOFT $-0\mathrm{.}05\%$ and has issued a euro$-$denominated bond at $8\mathrm{.}5\%.$ A client of the U$.$S bank, a U$.$S public utility with a BBB rating and long$-$term assets, can issue floating$-$rate debt at SOFR $+0\mathrm{.}60\%$ and fixed rate debt at $9\mathrm{.}0\%.$ The U$.$S bank meanwhile, knows a AA$-$ rated German bank that owns euro$-$denominated bonds yielding $8\mathrm{.}5\%$ and can borrow in U$.$S dollars in the bond market at $8\mathrm{.}0\%.$ All three entities would like to avoid both interest rate and current risk.

a$.$ Suggest a currency swap that would allow two of the parties to eliminate their currency risk

b$.$ Suggest a separate interest rate swap that would allow two of the parties to reduce or eliminate their interest rate risk $($Hint: Do the currency swap first$)$

c$.$ Show how the swaps would be done and what the payments would be to each party

d$.$ What are the total possible gains to the parties to the swaps.