Currency Swap Example
A European Company A is doing business in the USA, and it has issued a $20 million dollar-denominated bond to investors in the US. An American Company B is doing business in Europe, and it has issued a bond of €15 Million Euros. The two companies can enter into an agreement to exchange the principal and interest of the bonds. The €15 million Euro-denominated bond will be the obligation of company A, and company B will be obligated to the $20 million bond.
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