Swap Negotiators Reduces Unwind by $70K for Medical Group

Swap advisors create transaction transparency by having access to the same live market data as the banks so that no hidden bank fees can be included when unwinding an interest rate swap.

Winter Park, Fl., March 18, 2013 – Swap Negotiators, an advocate for commercial borrowers, recently represented a large urology group in San Antonio, Texas unwinding an interest rate swap transaction and saving the group more than $70,000 in undisclosed bank fees. 

                  

In an effort to refinance its real estate debt, a large urology group became frustrated because of what appeared to be an excessive swap termination fee.  In the eleventh hour, the group engaged Swap Negotiators as their representative for the transaction.

Swap Negotiators acts as an intermediary between borrowers and their banks on all types of swap transactions including executing, modifying, unwinding, and assigning. 

“An important part of our team consists of former bankers that worked on the derivatives side of the bank.  They help us to create transparency and bring expertise to all borrowers when considering strategies and executing interest rate hedges,” stated Andy Johnson, an Associate with Swap Negotiators.  “We utilize the same live tools as the banks so that no hidden fees can be included.”

In this particular transaction to unwind an interest rate swap, the Texas urology group had been quoted an unwind fee of $1,518,000.  Swap Negotiators was able to conclude the unwind at $1,447,000; a difference of more than $70,000.  Additionally, Swap Negotiators' sister company, CMAC, negotiated to include the unwind value in the refinanced debt. 

“Although some of the savings were market-driven, the majority were not,” said Andy Johnson, an associate with Swap Negotiators. “The bank backed off of their payoff once Swap Negotiators had created transparency in the transaction.”

About Swap Negotiators
Located in Central Florida, Swap Negotiators provides advocacy, expertise, and advice on interest rate swap contracts for commercial borrowers and works in partnership with banks, commercial real estate attorneys and mortgage brokers to provide transparent pricing, valuations and ongoing support for the life of a swap. Additional information about Swap Negotiators can be obtained by calling (407) 264-7264 or by visiting www.swapnegotiators.com.

Media Contact
Andy Johnson
Swap Negotiators
Phone: (407) 264-7264
Email: andy@swapnegotiators.com

Interest Rate Swap Example

Attorneys advising commercial real estate clients on interest rate swap transactions can benefit from the services of a swap negotiator.

An Interest Rate Swap Example

A real estate attorney was contacted by a client wishing to enter into an interestrate swap agreement.  The description of the swap indicated that it would be based on 1-month LIBOR (London Interbank Offered Rate), have a 5, 7, or 10-year term, and that the notional amount would be structured on a 20-year amortization schedule. As of March 5^th, 2013, these breakeven swap rates would be 0.82% for 5 years, 1.26% for 7 years, and 1.73% for 10 years.  How do I best advise my client and what does all this really mean?  

LIBOR Explained

First, the London Interbank Offered Rate or LIBOR rate is the average interest rate that they would be charged if borrowing from other banks, or estimated by leading banks in London.  It is the primary benchmark for short-term interest rates around the world.

Interest Rate Swaps Explained

An interest rate swap is a widely used financial derivative instrument in which two parties agree to exchange interest rate cash flows.  In its most common form, a commercial borrower will pay an agreed fixed rate ("swap rate") in exchange for the "swap counterparty" to take responsibility for payment of its floating rate obligation. 

In the commercial real estate attorney’s interest rate swap example, the breakeven swap rates show the fixed rate a commercial borrower would have to pay (not including any loan spread) if they entered into a swap agreement where the borrower received the floating 1-month LIBOR rate.

If a commercial borrower enters into a 7-year interest rate swap, for example, they would pay a fixed rate of 1.26% for 7 years and in return they would receive interest payments based on the 1-month LIBOR rate.  The borrowers interest payments would be fixed while the money they received from the swap would be variable based on the 1-month LIBOR rate. 

The swap also indicated that it will be quoted at mid-market breakeven. This means the rates were reported at the average of the bid and ask prices of the market; it is considered the fair market value.  Additionally, as indicated in the interest rate swap description, the swap settles interest payments each month.

How Swap Advisors Can Help Attorneys

Advising clients on interest rate swap transactions can create a new revenue stream for attorneys.  Although these contracts are complicated financial transactions, a swap advisor can assist the attorney and his client in translating the banks information into plain language, taking the mystery out of a swap contract.  Having worked on the derivatives side of the bank, a swap advisor is the best defense to negotiate pricing and terms while reducing interest expense. Without a swap negotiator there is no transparency, and the bank can easily quote inflated pricing without the borrower's knowledge.

Clients Save Hundreds of Thousands of Dollars

By partnering up with a swap advisor, the attorney’s commercial real estate clients can save hundreds of thousands of dollars.  How’s that?  

Banks have historically charged excessive, uncontrolled, and undisclosed fees on all types of interest rate swap transactions allowing them to profit greatly by adding these hidden fees.  A swap advisor has access the same live data and computer models as the bank, which creates transparency and thereby reduces or eliminates banks’ undisclosed fees.  By working with a swap negotiator, clients gain peace of mind that their interest rate swap transaction is being handled by an expert and that their bank has not unfairly profited. 

Attorneys advising commercial real estate clients on interest rate swap transactions can benefit from the services of a swap advisor by creating transparency, providing peace of mind to their clients, and helping them save a significant amount of money in these complicated financial transactions. 

About Swap Negotiators
Located in Central Florida, Swap Negotiators provides advocacy, expertise, and advice on interest rate swap contracts for commercial borrowers and works in partnership with banks, commercial real estate attorneys, and mortgage brokers to provide transparent pricing, valuations and ongoing support for the life of a swap. Additional information about Swap Negotiators can be obtained by calling (407) 264-7264 or by visiting www.swapnegotiators.com.

Swap Negotiators Educates Seminar Attendees on Hidden Interest Rate Swap Fees

FOR IMMEDIATE RELEASE  

Commercial borrowers are informed of a simple way to save hundreds of thousands of dollars  

Winter Park, FL., - February 26, 2013 – Swap Negotiators, an advocate for commercial borrowers, recently attended The Commercial Real Estate Financing 2013 seminar in New York which explored major issues, problems and recent changes in how lenders and borrowers negotiate commercial real estate loans in the lingering shadow of the recent financial crisis.

The two-day seminar provided an overview of many topics of interest and importance to commercial real estate attorneys, executives, in-house counsel, asset managers and acquisition managers.

“One subject, in particular, was mentioned in the published materials attendees received, but not fully covered during the conference due to time constraints,” said Andy Johnson, an Associate with Swap Negotiators. “We felt it was important to further expand on the topic of hidden interest rate swap fees and we are in the process of educating seminar attendees and others about this topic.”

Interest rate swaps are commonly used when executing commercial real estate loans. Swaps are an effective way to hedge against the interest rate risk associated with floating rate debt; it allows the borrower to replace the floating rate index in their loan with a known fixed rate. This is a great way to manage risk and obtain predictable cash flows.

“The swap provider (usually the bank) will add a mark-up in basis points to the fixed rate. This mark-up can equate to hundreds of thousands of dollars over the life of the loan. What's more important to know is that this charge is undisclosed, often excessive, and can be negotiated. This is where Swap Negotiators comes in,” Johnson stated.

Swap Negotiators acts as an intermediary between borrowers and their banks on all types of swap transactions (executing, modifying, unwinding and assigning). An important part of their team consists of former bankers that worked on the derivatives side of the bank and, because of this, they are able to create transparency and bring expertise to ALL borrowers when considering strategies and executing interest rate hedges.

“While banks are due a fee when booking a swap to cover the element of risk, the borrower should be represented so that he may competently negotiate a reasonable price. This can only be done when a borrower has access to live market data, which ensures that the contract is concluded in accordance with negotiation,” added Johnson. “With our help, other commercial borrowers have saved hundreds of thousands of dollars.”  

About Swap Negotiators Located in Central Florida, Swap Negotiators provides advocacy, expertise, and advice on interest rate swap contracts for commercial borrowers and works in partnership with banks to provide transparent pricing, valuations and ongoing support for the life of a swap. Additional information about Swap Negotiators can be obtained by calling (877) 218-8016 or by visiting www.swapnegotiators.com.

Media Contact
Andy Johnson
Swap Negotiators
Phone: (407) 264-7264
Email: andy@swapnegotiators.com