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Two companies, Caterpillar and GE, have been given indications by a debt capital market banker at Barclay's Bank about where they could issue either fixed
Two companies, Caterpillar and GE, have been given indications by a debt capital market banker at Barclay's Bank about where they could issue either fixed rate or floating rate debt to investors. The terms they were shown are as follows: Fixed Rate Floating Rate Caterpillar 8.00% 3-mo LIBOR flat GE: 8.80% 3-mo LIBOR flat Caterpillar requires floating rate debt, GE requires fixed rate debt. If Barclay's Bank were to intermediate a swap transaction between the two companies for a fee of 10 basis points, what would be the cumulative sum total gain to both companies, CAT and GE, in basis points? 35 80 70 0
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