SS

PP

Singapore Bank
5.0%
5.5%

Philippine Bank
10.2%
10.0%

SS borrowed 1 million sgd from Singapore bank, paying 5.0% interest

PP borrowed 32 million php from Philippine bank, paying 10.0% interest
SWAP INITIATION
SS gives 1 million sgd to PP, interest at 5.5%
PP gives 32 million php to SS, interest at 10.2%

1 SGD = 32 Php

SS pays 1 million sgd x 5.0% (50,000 sgd) to Singapore bank

PP pays 32 million php x 10% (3,200,000 php) to Philippine bank.

SWAP INTEREST PAYMENTS

SS pays to SG Bank
1 million SGD x 5%
SS receives from PP
1 million SGD x 5.5%
Net Gain/(Loss)

PP pays
PP receives
Net Gain/(Loss)

1 SGD = 25 Php

32 million PHP x 10%

1 million SGD x 25 PHP/SGD x 10.2%

50,000.00
55,000.00
5,000.00

3,200,000.00
2,550,000.00
(650,000.00)

SWAP TERMINATION
SS gives 33m php to PP, however, SS only received 32m php from PP during swap initiation
PP gives 1m sgd to SS, PP received 1m sgd from SS during swap initiation

SS receives and returns 1m sgd from sg bank. he receives 1m sgd from PP at termination date, so fro
SS receives 32m php from PP at initiation date, but he returns 33m to PP at termination date, so he lo
PP receives and returns 32m php from ph bank, but receives 33m php from SS at termination date, so
PP receives 1m sgd from SS at initiation date, and he repays 1m sgd to SS at termination date, so ther
SS gives 1 million sgd to Singapore bank
PP gives 32 million php to Philippine bank

End result:

SS gains 5000 sgd but loses 1 million php

PP gains 350,000 php

SGD

PHP

ap initiation

ermination date, so from this transaction, there's no gain/loss

mination date, so he loses 1 million php from this transaction
at termination date, so from this transaction, he gains 1m php
rmination date, so there's no gain/loss from this transaction

1 USD = 0.9 EUR

1 USD = 1.0 EUR

Notional Amount

1,000,000 USD

US gives 1,000,000 USD to EUR

EUR gives 900,000 EUR to US