Harvards Bet on Interest Rate Rise Cost $500 Million to exit
Oct. 17 — Harvard Universitys failed bet that interest rates would rise cost the worlds richest school at least $500 million in payments to escape derivatives that backfired.
Harvard paid $497.6 million to investment banks during the fiscal year ended June 30 to get out of $1.1 billion of interest-rate swaps intended to hedge variable-rate debt for capital projects, the schools annual report said. The university in Cambridge, Massachusetts, said it also agreed to pay $425 million over 30 to 40 years to offset an additional $764 million in swaps.
I fear future Harvard students will be shivering, attending their class in a classroom heated by a lone charcoal stove.:-)
So they actually lost close to $1 billion? $497.6 million + $425 milion?
So to escape the $1.1 billion swap they paid $497.6 to make it go away and then $425 to unload the $764 million? I guess they could not just sell it it. I guess the swap is a contract that is there and you have to pay someone to take the bag of s**t off your hands.
Stinking liberals.
This is the kind of deal that should have been available to the Feds when they were bailing out every institution. 45 cents a buck or less depending on volume.
yitbos