Why a company would enter into an interest rate swap

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Reference no: EM131410443

The following excerpt was taken from the annual report of Bristol-Myers Squibb, a leader in pharmaceutical and health care products.

Derivative financial instruments are used principally in the management of its interest rate . . . exposures. . . . The Company has entered into fixed to floating interest rate swaps for $3.9 billion of its long-term debt . . . in conjunction with the new issuance of $1.25 billion 5.87% Notes . . . the Company executed several fixed to floating interest rate swaps to convert the fixed rate debt . . . to variable rate debt.

REQUIRED:

Explain the meaning of this footnote, and why a company would enter into an interest rate swap.

Reference no: EM131410443

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