Modifying a swap: Minimizing the cost

An interest rate swap is not necessarily a one-time transaction.  Because the interest rate environment changes over time, it is important to evaluate existing interest rate swaps.  Often a borrower will benefit from changing or amending an interest rate swap to implement a modified loan structure or to take advantage of changing trends in the interest rate environment.  Even a seemingly small change in the swap rate can have a large impact on a borrower’s interest cost.

To see the value of a mere 0.01 percent change in your swap rate, try DAG’s Swap Rate and Value Calculator.

Getting the Best Pricing
An interest rate swap modification actually consists of two separate transactions: the termination of the existing swap and the execution of a new swap.  Consequently, the bank charges additional, often hidden, fees for each of these transactions.  DAG’s experience and pricing expertise enables your advisor to measure and negotiate the bank’s fees for modifying your interest rate swap.  DAG calculates the value of an interest rate swap using the same data and programs that the banks use.  By doing so, DAG provides you with transparent pricing, providing you with leverage to negotiate the best possible deal.

Contact DAG today to learn how we can assist in modifying your interest rate swap.

DAG is an independent financial advisor serving the corporate, non-profit, tax-exempt and municipal debt markets.  DAG guides borrowers in the use of interest rate swap and bond reinvestment products, acting as a consultant, structurer, and bidding agent in these transactions.