Transparency Just a Part of the Transaction
Swap Negotiators Helps Borrower Execute Swap Modifications at Low Spreads
Boca Raton, Fl. – A Florida medical office building developer, executed two swap modifications that enabled them to extend the fixed rates on their properties and, at the same time, improve cash flows.
The trades, commonly known as blend and extends, allowed the borrower to incorporate the negative value of the existing swaps into the value of the longer-term replacement swaps. Because swap rates had declined substantially from the time that the original swaps had been executed, the new longer-term rates (even after blending) were lower.
Typically, without the intervention of a swap negotiator on a blend and extend, a bank will add profit to both the existing value and the new trade. With Swap Negotiators handling the transaction, there was no profit added to the blended value and the new swap spread was half of what was charged on the original trade that had been executed without Swap Negotiators.
As seen in: The Journal of Medical Real Estate