Caisse d'Amortissement de la Dette Sociale, the French agency responsible for repaying social security debt, has converted a seven-year USD100 million medium-term note into a euro-dominated liability. Christophe Frankel, cfo, said the company chose to issue this bond in dollars due to investor demand for debt dominated in this currency. It then carried out the swap since all its liabilities are euro-denominated.
In the swap, CADES pays floating-rate euros and receives fixed-rate dollars. Frankel said it pays more than 20 basis points below three-month Euribor and receives the 4.32% coupon on the bond. The maturity of the swap matches that of the medium-term note. Royal Bank of Scotland was both the book runner of the note and the counterparty to the swap.
CADES was set up to repay around EUR50 billion (USD54 billion) of debt accumulated from 1994 to 1998 by the French social security department. Its funds come from a tax known as CRDS which is levied on all categories of income.
