Released on: December 3, 2007, 4:35 am

Press Release Author: InvestLine

Industry: Financial

Press Release Summary: Ovetii have recently reported that derivative markets are
showing that it\'s cheaper to exchange fixed- for floating- interest-rate payments
over a two-year period in the U.S. than in Europe for the first time since April
2004.

Press Release Body: According to sources at Ovetii, the rate on a U.S. two-year
interest-rate swap, used by companies and investors to hedge against changes in
interest rates, fell below its counterpart in Europe by 0.01 percentage points
yesterday. The two-year U.S. swap rate was one percentage point more than those in
Europe at the start of the year.

A senior Ovetii analyst reportedly stated that expectations for more Federal Reserve
interest rate cuts combined with the European Central Bank\'s obstinacy in seeing the
shadow of inflation lurking behind every tree in the background is narrowing the
swaps spread, A move in the spread between U.S. and European two-year swap rates to
minus 20 basis points is certainly feasible.

Ovetii researchers are apparently of the opinion that a further narrowing of the
spread will benefit holders of agreements to receive fixed-rate payments on U.S.
swaps, and to pay fixed-rate payments on European swaps. An Ovetii source have
stated that soaring trading volume in the swap market has increased its allure to
investors. The average daily turnover in interest-rate swaps soared 95 percent in
the last three years to $1.21 trillion a day, according to a Bank for International
Settlements survey released last month.

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