EFTA Document EFTA01806567

From: Barrett, Paul S Sent: Friday, April 15, 2016 12:45 PM To: Brad Wechsler Cc: Jeffrey Epstein ([email protected]); Barrett Team; Nelson, Justin D Subject: EUR Cross-Currency Funding Strategy to cheapen a EURO denominated floating rate loan Brad If Leon or the company has EURO denominated loansR=0;...read on. - =nbsp; Credit lines at many banks floor the floating index=at 0%. With 1-month Euribor fixing at -0.342%, many borrowers don't r=alize the benefit of negative interest rates. =nbsp; You can bypass this floor by borrowing in USD at 1-m=nth Libor (plus a spread) and using a cross-currency swap to create a synth=tic EUR loan. This allows you to not only capture the benefit of negative r=tes but also cheapen funding from the cross-currency differential in the market. Current Sample Borrowing Outstanding EUR loan @ 1-month Euribor + 100 bps<=:p> <=:p> Steps to create a Synthetic EUR Loan=/u> 1) Drawn down EUR equivalent notional from your=USD Line @ 1-month Libor + 100 bps c=:p> EFTA_R1_00154211 EFTA01806567 2) You are left with EUR interest payments and exposure= All USD flows net out. See net exposure below. Results </=pan> - =nbsp; By creating a synthetic EUR loan via cross-currency=swaps, you can reduce funding costs by roughly 55 bps for 1 year (combinatio= of savings from negative Euribor rates and negative cross-currency basis).=u> All pricing is indica=ive &n=sp; <=pan style="font-size:8.0pt;font-family:"Verdana","sans- ser=f";color:#5F5F5F"> <=spa n> <=pan style="font-size:8.0pt;font-family:"Verdana","sans-ser=f";color:#1F497D">Paul Barrett I Managing Director I Global Investment Opportunities Group I J.P. Morgan Securities LLC I J.P. Morgan Private Bank =.I.P. Morgan Chase Bank N.A. 320 Park Avenue, 14th Floor, New York, NY 10=22 I T: I F: NOT AN=OFFICIAL CONFIRMATION: For informational=purposes only. This report does not represent an official account of=the holdings, balances, or transactions made in your account and is being p=ovided at your request. Please refer to your monthly account statement for the official record of all of your ac=ount activities. For question, please call your J.P. Morgan represent=tive. In discussion of options and other strategies, results and risks ar= based solely on hypothetical examples cited; actual results and risks will=vary depending on specific circumstances. Investors are urged to consider carefully whether option or option-related=products in general, as well as the products or strategies discussed herein=are suitable to their needs. In actual transactions, the client's cou=terparty for OTC derivatives applications is JPMorgan Chase Bank, N.A., and affiliates. For a copy of the "Char=cteristics and Risks of Standardized Options" booklet, please contact=your JPMorgan Advisor. 2 EFTA_R1_00154212 EFTA01806568 This e=ail is confidential and subject to important disclaimers and conditions inc=uding on offers for the purchase or sale of securities, accuracy and completeness of information, viruses, conf=dentiality, legal privilege, and legal entity disclaimers, available at http://www.jpmorgan.com/pages/disclosu=es/email <http://www.=pmorgan.com/pages/disclosures/email> . This email is confidential and subject to important disclaimers and conditio=s including on offers for the purchase or sale of securities, accuracy and=completeness of information, viruses, confidentiality, legal privilege, and=legal entity disclaimers, available at http://www.jpmorgan.com/pages/disclosures/email <http://www.jpmorgan.com/p=ges/disclosures/email> <=span> 3 EFTA_R1_00154213 EFTA01806569