‘With reduced opportunities for the profitable arbitraging of interest rate differentials between borrowers in different markets, swaps have increasingly been used to facilitate the restructuring of borrowers’ existing debts.’

Posted: January 10th, 2022

‘With reduced opportunities for the profitable arbitraging of interest rate differentials between borrowers in different markets, swaps have increasingly been used to facilitate the restructuring of borrowers’ existing debts.’ Discuss and explain this statement. (LO 21.2)

Present your offer to the companies. Use a fully labelled diagrammatic representation to show the construction and cash flows of the intermediated swap. (LO 21.1)