Analyzing Swap Strategies for Multinational Corporate Risks

Company ABC is a multinational corporation that operates in various countries and has significant foreign currency exposure. To manage its interest rate and currency risk, ABC has entered into a series of interest rate swaps and currency swaps.

Recently, the financial situation of Company ABC has changed due to lower-than-expected earnings and increased interest rates. The management is considering several swap strategies to enhance cash flow and mitigate the risks associated with interest rate fluctuations and foreign exchange rates.

Your task is to analyze the various swap strategies that Company ABC can employ. Discuss the potential advantages and disadvantages of using interest rate swaps versus currency swaps in the context of the company’s objectives. Additionally, provide a detailed recommendation for a swap strategy that aligns with ABC's risk management profile and financial objectives, integrating factors such as current market conditions, interest rate expectations, and foreign exchange volatility.