Terminating an Interest Rate Swap

When a borrower decides to refinance a loan early, or to make a partial pay-down, the borrower is required to terminate all or part of any interest rate swap attached to the loan. In many cases, terminating an interest rate swap can be as challenging for a borrower as entering into an interest rate swap. One particular challenge is determining a fair, accurate termination value for the interest rate swap. In order to determine the true market termination value, it is critical to perform an independent calculation, using current market rates and pricing data. However, if a borrower does not have access to this pricing data, it is nearly impossible to determine the true termination value of the interest rate swap.

DAG provides termination value expertise
DAG makes certain that clients receive the best value when terminating an interest rate swap. DAG uses the same real-time pricing data and computer models that the banks use. By doing so, DAG advisors determine exactly what an interest rate swap is worth. By providing price transparency, DAG reduces your interest rate expense, and maximizes your termination value.

DAG experts guide you in termination value calculations to ensure you pay (or receive) the true market value of the swap by eliminating hidden bank fees. If there is a disagreement between your valuation and the bank’s, DAG provides you with the tools to challenge the bank’s valuation. DAG also guides you in any accounting required for the swap’s termination.

As an alternative to termination, DAG can also help you assign your swap to a third party.

Contact DAG today to learn how we can assist you in achieving a favorable interest rate swap termination.

DAG is an independent financial advisor serving the corporate, non-profit, tax-exempt and municipal debt markets. DAG helps implement the right hedge structure for you, at the right price, with the best terms.