Hibernia, Louisiana's largest financial institution, has unwound two interest-rate hedges the bank entered prior to a recent USD100 million note sale for a gain of USD4.7 million. Alan Ganucheau, treasurer in New Orleans, said the bank hedged the 10-year note offering by entering a Treasury lock and a forward-starting swap, each with a notional size of USD50 million. It entered the hedges in March and unwound them after the bond sale was completed late last month.
Hibernia was able to keep its funding costs down to 4.755% on the fixed-rate coupon of 5.35% bond via the Treasury lock, Ganucheau said. In the swap Hibernia paid a fixed-rate of 4.2% and received LIBOR. Credit Suisse First Boston, which also was the lead manager on the note sale, was the counterparty for the Treasury lock while Bear Stearns executed the interest-rate swap. The dealers form part of Hibernia's group of relationship banks and were selected according to criteria including price, he explained.