China International Marine Containers (Group) Co., one of the world's largest manufacturers of marine containers with over CNY9.44 billion (USD1.14 billion) in assets, is considering entering interest rate swaps on the back of upcoming debt issues. "We've been [looking] into the possibility of new long-term financing," said Tony Yao, assistant manager in the finance department in Shenzhen.
Yao said it is considering issuing up to USD100 million in dollar-denominated floating rate debt by year-end, which would likely be converted into fixed rate liabilities, via interest-rate swaps. He explained that with the majority of CIMC's CNY5.9 billion in short-term liabilities, it makes sense to lock-in some long-term rates before interest rates rise in the next year or two. The company is speaking with Citigroup and Société Générale about possible applications for derivative instruments. "Derivatives are a good way for us to manage our risks," Yao added.
CIMC will select products on the basis of pricing and safeness of the structure and takes into account relationships and level of service. Bonnie Wu, spokeswoman at Citigroup, and Laura Schalk, spokeswoman at SG, did not return calls.
