Mass. transit overseers vote to unwind costly swaps

BOSTON – State transportation system overseers are moving ahead on unwinding a series of swaps, sophisticated financial bets on the direction of interest rates, that have kept part of the state's transportation-related debt payments locked in at higher rates.
Terminating the interest-rate swaps with UBS and Deutsche Bank is part of a broader effort on the part of the Massachusetts Bay Transportation Authority and the state transportation department to get more favorable terms on its debt. It is sold by Wall Street banks, who earn significant fees from the transactions, as a way to hedge against the risk of higher costs on variable-rate debt, providing a kind of financial insurance.