Abbey National has converted the proceeds of a recent CAD475 million (USD357 million) bond issue into sterling. The move was driven by the Canadian market providing good opportunities for funding by private placement and for diversification, according to Sarah Robinson, manager of Abbey's capital markets desk in London.
Royal Bank of Canada Capital Markets is the counterparty on the swap and also bookrunner on the bond issue. Robinson noted, "Generally, the bookrunner on the bond issue is the counterparty on the swap." She declined to reveal the rates exchanged in the swap. The coupon is the floating rate three-month Bankers' Acceptance plus 13 basis points.
The basis swap rate for Canadian dollars to sterling is particularly attractive right now and it is encouraging non-Canadian corporates to issue bonds to the Canadian market, explained a trader at RBC CM. The trader added, "This is coupled with a large number of Canadian dollar redemptions in January, which means there are a number of investors willing to put money back into the market and who are attracted by non-Canadian names."
