What are the interest savings by each company

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Company A has outstanding debt on which it currently pays fixed rate of interest at 9.5%.the company intends to refinance the debt with a floating interest .the best floating rate it can obtain is LIBOR+2%.however ,it does not want to pay more than LIBOR .another company B is looking for a loan at a fixed rate of interest to finance its exports .the best rate it can obtain is 13.5%,but it cannot afford to pay more than 12%.however,one bank has agreed to offer finance at a floating rate of LIBOR+2%. Citibank is in the process of arranging an interest rate between these two companies.

With a schematic diagram, show how the swap deal can be structured

What are the interest savings by each company?

How much would Citibank receive

Reference no: EM132021341

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