The San Diego Padres Baseball Club Limited Partnership, owner of the West Coast Major League Baseball team, is considering pulling the trigger on an interest-rate swap following its planed USD150 million debt offering, according to Fred Gerson, cfo. Proceeds from the debt offering, which is expected to hit the market by late April or early May, have been earmarked for the financing of the Padres' new stadium and to build additional infrastructure around the new ballpark, Gerson said. The company is planning to either issue a bond offering on the back of a bank loan it secures for the stadium or go directly to the bond market for the financing.
Gerson said it would look for a maturity of more than 20 years on a corporate bond offering. "We are definitely considering an interest-rate swap following the bond deal," Gerson said. In the swap the company would look to receive a fixed rate and pay a floating rate, with the maturity likely matching that of the bonds. Gerson said the Padres have used interest-rate swaps in the past, but declined to provide further details.
If the company opts to raise the capital via a bank loan first, it plans to secure the loan with an insurance company, Gerson said. He added that the insurance company would not be used as a counterparty for the swap and the company would look toward bulge bracket firms for that role. He declined to elaborate further.