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-   -   I'm Not as Smart as Harvard~Good Deal! (https://www.early-retirement.org/forums/f28/im-not-as-smart-as-harvard-good-deal-46864.html)

mickeyd 10-17-2009 11:21 AM

I'm Not as Smart as Harvard~Good Deal!
This seems a bit speculative to me, but I'm not that smart about this kind of sophisticated investment.


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 school’s 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.
The transactions began losing value last year as central banks slashed benchmark lending rates, forcing the university to post collateral with lenders, said Daniel Shore, Harvard’s chief financial officer. Some agreements require that the parties post collateral if there are significant changes in interest rates.
Harvard’s Bet on Interest Rate Rise Cost $500 Million to Exit - Bloomberg.com

bssc 10-17-2009 01:14 PM

Ouch, I see my university got sucked into them too. I suspect that I will also get a letter asking for me to bail them out.

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