Case Study 5 – Early Unwind of a Swap

A company which had entered into an interest rate swap decided to close it out.  The company contacted the bank directly to do so and received a quote for the Break Cost which it felt was too high.  The company protested but the price was not changed.

AHV valued the swap and negotiated a Break Cost which was approximately 15% lower.  The bank had suggested that its price was justified using various arguments which AHV negated.  The company closed out the swap at the negotiated price.