Unibail, a French commercial property company, has entered an interest rate swap on a recent EUR300 million (USD297.6 million) bond offering to convert it to a floating-rate liability. The company is paying 77 basis points over Euribor and receiving 4.75%, the coupon on the bond. Julie Fagart, an official in the treasury management office in Paris, said the company entered the swap to maintain its fixed-to-floating rate debt ratio. The company typically keeps 5-10% of its debt portfolio with floating-rate exposure because the majority of its rental income has a fixed rate of interest.
HSBC, Credit Lyonnais and Credit Agricole Indosuez are the counterparties on the swap. Fagart said the trio was chosen because the firms were the co-lead managers on the bond offering. Unibail requires counterparties to have a minimum credit rating of single A.
The company has entered two fx swaps in the past to convert Japanese yen offerings into synthetic euro-denominated liabilities. Fagart said, however, if investors showed demand for Unibail's debt obligations in another currency, the company would use fx swaps to convert the offering into euros. "If someone wants to give us money in another currency, we will do it."