Calculating a Swap’s Value

If a borrower is refinancing a loan early, or making a partial paydown, it will have to terminate all or part of any swap attached to the loan.  Terminating an interest rate swap has the same challenges for a borrower as entering into a swap.  Current market rates and pricing determine a swap’s termination value.  If a borrower doesn’t have access to this pricing data, it can’t determine the true value of the swap.  In order to minimize your termination payment (or maximize the value you receive) it’s important to independently calculate the value of your swap.

DAG’s Valuation Expertise

DAG insures our clients receive the best value when terminating a swap.  DAG uses the same live-pricing data and computer models that banks do, so we know exactly what a swap is worth.  By creating price transparency DAG reduces your interest rate expense.

Our experts will guide you in step-by-step calculations to insure you pay (or receive) the true market value of the swap by eliminating hidden bank fees.  If there is a disagreement between our valuation and the bank’s, we will give you the tools to challenge their valuation.  DAG can also help you assign your swap to a third party as an alternative to a termination.

DAG will also guide you in any accounting required for the swap’s termination.

DAG simplifies and maximizes value in the swap termination process by:

Calculating Termination value and monitoring the bank’s profit margin

Assisting you in negotiating any termination fees

Structuring a termination/unwind to meet changes in the loan structure or interest rates

Negotiation the assignment/novation value and terms

Providing guidance to ensure proper accounting

Have peace of mind with DAG handling your hedging transaction.