New World Development Company, one of Hong Kong's largest conglomerates with over HKD130 billion (USD970 billion) in assets, is considering entering interest rate swaps next year to diversify its debt book. "We have too much in HIBOR, we should diversify our risk," said Alfred Lo, assistant treasurer.
In the swaps, it would pay U.S. LIBOR and receive Hong Kong dollar HIBOR, explained Lo. New World has HKD20 billion of debt outstanding, of which about 10-15% is hedged via interest rate swaps. Lo noted that early-to mid next year the company may increase its hedging by a few additional percentage points.
Lo said price is the most important factor in selecting a counterparty. "We'll deal with any bank," he added.
