Using Swaps

When you select "Swap" as the Rate Type when pricing a loan, you'll notice a few changes and new fields in the Opportunity Screen.

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Indicative Fixed Rate

  • Fixed Rate your bank is selling to the borrower; equals the swap rate plus the swap profit. This field is also in the Swap Information pop-up.

Swap Information

  • Clicking this field opens a popup that allows you to define the terms of this Swap.

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Forward Start Term

  • Allows you to enter an amount of time in months until the actual beginning of the interest rate swap while "locking in" these swap rates.

Floating Rate to Bank

  • Floating rate your bank is buying in this swap. This field is pre-filled using the index and spread entered on the pricing screen. 

All-In Swap Rate

  • Swap rate plus spread. The swap rate comes from your swap provider and will depend on the maturity/amortization you've entered for this deal. 

Swap Profit

  • The amount, expressed as a percentage, added on top of the all-in swap rate to give the indicative fixed rate.
    • Typically this field is pre-populated with a default set by your administrator. If there is no default, you'll need to enter the swap profit for this deal. Your internal team can provide guidance on the appropriate profit for your bank.
    • Linked via PV01 to the Swap Fee.

Indicative Fixed Rate

  • Fixed Rate your bank is selling; equals the all-in swap rate plus the swap profit.

Swap PV01

  •  The present value of one basis point per $1 million (scaled to loan amount).

Swap Fee

  • The Swap Fee charged to the borrower. The swap fee will also populate in the 'Fees' field on the pricing screen (shown below)
    • Calculated as the PV01 amount times the number of basis points of swap profit added.
    •  On the Financial Statement, the swap fee is included with Initial Fees and is annualized over the life of the loan. On the Amortization table (available via Advanced Analytics), the Swap Fee will be applied to the first month's amortized fees/expenses.

 

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The Swap Information pop-up shows the most recent date PrecisionLender received pricing information from your Swaps provider. This data is tied to your pricing date, which means that you must update your pricing date in order to use the most up-to-date Swaps indicative pricing data. PrecisionLender will update the Swap rates daily as they are available from your Swap provider. 

 

Since indicative pricing data comes from your Swap provider, PrecisionLender doesn't have access to every possible scenario for Swaps pricing. If you enter terms for which PrecisionLender does not have pricing data, you'll see a message in the Swap Information pop-up letting you know that we don't have data available for the loan's current configuration. You'll still be able to save that opportunity, but your indicative fixed rate will only factor in your swap profit without the indicative pricing data.

 

If you do not see Swaps as a Rate Type Option, please contact your local administrator who can work with PrecisionLender to get Swaps enabled and set up for the product you are using. If you have administrative access and would like to add Swaps as an allowable rate type for one of your products, you can do that in the Product Edit Screen. Please note that a loan with a LOC or Scheduled Draws or Repays payment types selected cannot have a rate type of Swap. For more information on setting up products, please visit Setting Up Commercial Loan Products.