Suppose Siemens Corporation Would Like to Borrow Fixed-Rate Yen and Can

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The Answer is Given the differences in rates between the two markets,the two parties can achieve a combined 15 basis point savings through Siemens borrowing floating-rate dollars at LIBOR + 0.25% and Singapore Development Bank borrowing fixed-rate yen at 4.9% and then swapping the proceeds.Siemens would be able to borrow fixed-rate yen at 4.35% if all these savings were passed along to it in the swap.This could be done by Siemens providing Singapore with floating-rate dollars at LIBOR + 0.25%,saving Singapore 0.55%,which then passed these savings along to Siemens by swapping the fixed-rate yen at 4.9% - 0.55% = 4.35%.Thus,the potential savings to Siemens range from 0 to 0.15%.

Suppose Siemens Corporation Would Like to Borrow Fixed-Rate Yen and Can

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