Case | HBS Case Collection | 1994 (Revised from original version)

State of Connecticut Municipal Swap

by Andre F. Perold

Abstract

The state of Connecticut wants to raise $325 million of long-term fixed-rate debt. One alternative is to do this synthetically--issue long-term variable rate debt and enter into an interest rate swap. The case is a vehicle for analyzing various floating rate structures and various kinds of swaps. Also raises issues relating to the default risk of swaps, as well as the term structure of the tax exempt and taxable debt markets.

Keywords: Borrowing and Debt; Credit Derivatives and Swaps; Interest Rates; Taxation; Management Analysis, Tools, and Techniques; Risk and Uncertainty; New England;

Citation:

Perold, Andre F. "State of Connecticut Municipal Swap." Harvard Business School Case 291-024, December 1994. (Revised from original May 1991 version.)