Scottish & Newcastle, an international brewing group in the U.K., has converted a sterling denominated fixed-rate bond into a synthetic floating-rate euro liability. The GBP100 million (USD182 million) issue, due 2007, pays a fixed rate of 5.625%.
Alan Dick, group treasurer in Edinburgh, said the group has euro denominated borrowings, so enters swaps to convert all proceeds from issues in other currencies. Dick declined to name the counterparties on the bond issue, but said Scottish & Newcastle requires derivatives counterparties to have a minimum Standard & Poor's rating of single A. The Royal Bank of Scotland, Deutsche Bank, Citigroup and Dresdner Kleinwort Wasserstein were the bookrunners on the bond. The corporate also has exposure to electricity and aluminium prices, which it currently manages by entering long-term swaps, according to Dick.
