Corporates eye cross-currency swaps as Euribor sinks

The European Central Bank cut its benchmark interest rate to 0.05% in September 2014, tempting some corporates to swap their debt into euros and cut their debt service costs. But some see hidden dangers

money1
Of note: low interest rate environment creates potential for windfall savings in debt service costs for corporate borrowers

Since the current period of low interest rates began, much of the discussion has centred on the difficulties the buy side faces in generating yield for investors. For corporate borrowers, though, it creates the potential for windfall savings in their debt service costs.

Not only can they finance themselves at historically low levels generally, but a recent cheapening of cross-currency swaps by up to 30% has enabled some to synthetically convert their debt into euros to take advantage of ultra

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

Most read articles loading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here