BIS central bankers’ speeches  3  (ii)  Receive floating overnight rate and pay 5/10-year in IRS market. This effectively synthetically transforms a one-year floating rate liability of bank into a synthetic 5/10year fixed rate liability. By loading margin over this rate, banks can make a 5/10year fixed rate loan to an infrastructure company.
And, significantly, considering that IRS trades about 140 to 150 basis points below sovereign yield, it is win-win for both banks and infrastructure companies who, even after bankers’ spreads/ margins, will be able to borrow at around 5/10 year Govt. bond yield (currently 8.40%). That is as simple as it can get in terms of creating two-in-one fixed-rate long-term marketbased financing solutions for infrastructure.