suyash1989

> One way of looking at an interest rate swap is the fixed payer is betting the interest rates will rise, and the variable payer betting they will fall.

Not really.

The market pays you to take on risk, so if you pay floating rate, your expected cost is lower than if you pay fixed rate. (compare historical average of 3m LIBOR vs 10y rate)

Depending on individual risk-reward tradeoffs, you may be more or less comfortable taking on this risk for the market-prevailing price.

If you're highly levered, facing large interest expenses, the increased risk may threaten your compliance with lender covenants or rating agencies.