Synopsis of article:
Borrowers: takeovers and bailout should solidify/improve existing transactions. Exceptions: borrowers with interest rate swaps with Lehman Brothers. Merrill Lynch and Lehman Brothers are going to be purchased by an economically stronger entity.
Bank of America’s purchase of Merrill Lynch should result in interest rate swaps ratings being upgraded. Regarding AIG, the federal government bailout may result in restoration of the nature of AIG’s making any borrower action under those agreements undesirable.
Potential benefits/risks that borrowers must evalutate and contend with when major players in the debt markets undergo the types of changes – each borrower should carefully analyze the effects of these developments in order to make a beneficial decision.
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