Taiwan Cement Corp., Taiwan's largest cement maker, recently started entering interest rate swaps in anticipation of further rate hikes. "We've just started and are looking to do more," said S.C. Huang, specialist in the finance department in Taipei.
The corporate recently entered three five-year interest rate swaps totaling TWD1.5 billion (USD44.6 million) to convert a portion of its TWD15 billion floating-rate debt into fixed. Huang continued that the company plans to hedge up to 50% of its floating-rate debt via swaps in the coming months. Taiwan's benchmark discount rate is 1.375%, but rates are expected to rise in the coming months, following hikes in the U.S.
The company's derivatives counterparties include Citigroup and ABN AMRO as well as domestic banks. Taiwan Cement selects counterparties on the basis of relationships and pricing.
