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minnies
Aug 31, 2020 21:53
3 yrs ago
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English term

re-striking.

English to French Bus/Financial Finance (general) Swap LIBOR
As part of a swap agreement involving transition from LIBOR to SARON.

"
You hold a swap of 10 million CHF with a remaining tenor of 10 years where you pay a fixed rate (2.50%) and receive LIBOR 3M
You therefore restructured the swap by replacing 3M Libor with SARON 3M1 and consequently re-striking the fix rate."
Proposed translations (French)
4 -1 en achetant un second taux plancher (prix d'exercice ou strike_
4 -2 redéfinir le prix d'exercice (strike) fixe

Discussion

Francois Boye Sep 3, 2020:
That definition allows to understand the restructured swap by replacing 3M Libor with SARON 3M1. In this case, the principal amount remains CHF 10 million; the agent in question pays a 2.5% fixed rate per year; in exchange, he receives a three months Swiss Average Rate Overnight, instead of Libor 3 months.
Francois Boye Sep 3, 2020:
the floor is a strike because it allows the agent in question to pay back the annual, fixed interest rate (2.5%). So my translation is correct given the parenthesis (prix d'exercice, strike).
Francois Boye Sep 2, 2020:
The text submitted by Asker does not mention a change in the fixed rate as the result of the restructured swap
Germaine Sep 2, 2020:
François, As you say, a swap is a contract. Whether "the agent" decides to protect themselves with a cap, a floor, or Captain America' shield doesn't "restructure" (= modify) such contract, i.e. change the LIBOR for the SARON and "consequently re-strike the fix rate". If you need to "assume" anything, why wouldn't you assume that there might be an adjustment of the fix rate to cover any spread arising from the method/type of conversion? Take a look at this source, for example: http://assets.isda.org/media/04d213b6/db0b0fd7-pdf/

Par ailleurs, du seul point de vue de la traduction, vous voyez une proximité quelconque entre "re-strike the fix rate" et "acheter un second taux plancher" - which back-translates to "buy a second [rate] floor" ?
Francois Boye Sep 2, 2020:
An interest rate swap is a forward contract in which one stream of future interest payments is exchanged for another based on a specified principal amount. Interest rate swaps usually involve the exchange of a fixed interest rate for a floating rate, or vice versa, to reduce or increase exposure to fluctuations in interest rates or to obtain a marginally lower interest rate than would have been possible without the swap.

That definition allows to understand the restructured swap by replacing 3M Libor with SARON 3M1. In this case, the principal amount remains CHF 10 million; the agent in question pays a 2.5% fixed rate per year; in exchange, he receives a three months Swiss Average Rate Overnight, instead of Libor 3 months.

As the agent's return rates are risky (based in both cases on a floating rate), the agent must protect him/herself. What does he do? He/she buys a floor rate on the OTC (over the counter). This fixed rate will protect the agent in question from the gyrations of floating rates (Libor and SARON).

This is the reason why my translation assumes that the agent buys a floor twice.
















Germaine Sep 1, 2020:
Yves, Je comprends que "Vous détenez un swap de 10 millions de francs suisses d’une [teneur][échéance] résiduelle de 10 ans pour lequel vous payez un taux fixe (2,50%) et recevez le LIBOR [à trois mois][3M]. Vous avez donc restructuré le swap en remplaçant le LIBOR [à 3 mois][3M] par le SARON [à 3 mois (bis)] [3M1] et en conséquence, vous [ré-établissez] [redéfinissez] [renégociez] [réviser] le taux fixe."

To strike an average: établir une moyenne
To strike a deal : conclure un marché
To strike the rate (of taxes) : définir/établir le taux des taxes foncières, des impôts.

Proposed translations

-1
3 hrs
English term (edited): re-striking the fix rate.
Selected

en achetant un second taux plancher (prix d'exercice ou strike_

Fist swap: swap of 10 million CHF with a remaining tenor of 10 years

Second swap: replacing 3M Libor with SARON 3M1


Exemple de SWAP On considère un swap à 2 ans entre deux entreprises
A, et B, initié le 5 mars 2005. L’entreprise A s’engage à payer un taux
d’intérêts de 5% à B sur un principal de 100M. En retour B s’engage à
payer des intérêts à A au taux LIBOR 6 mois.



Un floor est un actif financier entrant dans la famille des options sur taux d'intérêt. Il se négocie sur les marchés financiers de gré à gré.

L'achat d'un floor, qui se fait moyennant le paiement d'une prime, permet de se fixer un niveau plancher (prix d'exercice ou STRIKE) pour un taux révisable et de profiter d'une stabilité ou d'une hausse de ce même taux révisable.

L'achat d'un cap et la vente simultanée d'un floor de prix d'exercice différents constitue un collar.

Source:https://fr.wikipedia.org/wiki/Floor

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Note added at 16 hrs (2020-09-01 14:37:51 GMT)
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Erratum: OU STRIKE) instead of ou strike_

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Note added at 1 day 15 hrs (2020-09-02 13:15:59 GMT)
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SARON stands for Swiss Average Rate Overnight and represents the overnight interest rate of the secured funding market for the Swiss Franc (CHF). (Swiss Average Rate Overnight) is an overnight interest rates average referencing the Swiss Franc CHF. It is based on transactions and quotes posted in the Swiss repo market. SARON is administered by SIX.

Internationally, there is a consensus that financial benchmarks need to be resilient and reliable. Repo markets, in their role as the backbone of the financial industry and central bank activity, are the obvious choice. They are liquid, highly regulated, and stable. The National Working Group on the Swiss Franc reference rate, which leads effort to reform benchmark interest rates, has recommended SARON as the alternative to CHF Libor.

Peer comment(s):
disagree Germaine : Je n'ai trouvé aucune source qui soutienne cette idée. Par ailleurs, the fix rate is paid, so likely to be adjusted once the SARON replaces the LIBOR. // De quoi? Pas de cette suggestion: un contrat de SWAP n'est pas "restructured" par l'achat d'options.
14 hrs
Wikipedia is a source indeed!!!//See my response in the discussion section
Something went wrong...
4 KudoZ points awarded for this answer.
-2
22 hrs

redéfinir le prix d'exercice (strike) fixe

L'achat d'un floor, qui se fait moyennant le paiement d'une prime, permet de se fixer un niveau plancher (prix d'exercice ou strike) pour un taux révisable
Peer comment(s):
disagree Francois Boye : le mot redéfinir n'a pas de sens
2 hrs
disagree Germaine : Le mot redéfinir a du sens. Le problème, c'est qu'on ne parle pas d'options ici, mais d'un swap (qui n'a pas un "prix d'exercice", mais une échéance..
16 hrs
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