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Market Guides > The all in cost of fixed rate issuance

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Published: 19th September 2009 by William Webster

Borrowers (issuers) often use the bond market to access medium and longer dated funding. Some issuers prefer variable rate liabilities, some fixed rate liabilities. All issuers want to be able to borrow the required amount at the lowest possible cost but just how does a fixed coupon bond issuer calculate the cost of funds on a floating rate basis? Let's see.

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Document Summary

How fixed rate bond issuers swap to Libor. Matching the bond coupon and adjusting the floating rate on the swap, example of the all in cost. What happens if the bond is not issued at par. Up-front payments. Adjusting the floating payment on the swap, example of the all in cost. How much the dealer makes, example.

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