Britannia Building Society has converted the proceeds of a CAD125 million (USD95 million) bond issue into a synthetic sterling liability. Jeremy Helme, capital markets manager in Leek, U.K., said the thrift took advantage of favorable basis swap pricing in Canadian dollars. He said, "This opportunity may only exist for a few months longer." The bond pays a floating rate coupon of the three-month Bankers' Acceptance rate plus 14 basis points and has a two-year maturity.
Royal Bank of Canada was both the bookrunner and the swap counterparty. Helme said, "We chose RBC because of their strong position and experience in the Canadian market." He added that this issue might be one of many Canadian deals. Although Britannia runs a Canadian dollar asset/liability book, it chose to convert the issue to sterling because the proceeds are earmarked for general funding purposes. He declined to reveal the sterling cost of funding, but noted that Britannia achieved its target level.
