Currency Rate Swap between IBM and World Bank
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Code : INB0007
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Region : US
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Abstract: The case study Currency Rate Swap Between IBM and World Bank, discusses the first ever standard currency swap deal between IBM and World Bank. The case study explains how appreciation in dollar during the late 1980s against European currencies gave an opportunity to IBM to earn capital gains on the existing loans in Swiss Franc (CHF) and German Mark (DEM). However, it was possible only if IBM swapped its existing loans in CHF and DEM with someone. For this, Salomon Brothers started looking for a party on behalf of IBM. At last, it could find World Bank was the right candidate for the proposed swap. After few initial hurdles, World Bank and IBM agreed for the first ever standard swap transaction planned by Salomon Brothers. |
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Pedagogical Objectives:
Keywords : Currency Swaps, DEM and CHF loans, US Bond Market, IBM, World Bank, Salomon Brothers, Swap Deal
Contents :
» The International Business Machines Corporation (IBM)
» The financial Dilemma
