IN JEFFERSON COUNTY, ALA., PRESSURE GROWS OVERS SWAPS

THE WALL STREET JOURNAL
Mar 12, 2008

Pressure is intensifying on Jefferson County, Ala., after it failed to produce roughly $200 million to extend a faltering derivatives trade. Swaps can be used to lower risk. But swapping a fixed rate for a floating rate, or using swaps that encompass two different floating rates is pure speculation, says ROBERT WHALEY, a finance professor with the Owen Graduate School of Management at Vanderbilt University. "You're betting that the spread between rates will move in a certain way,' he adds.