Renault has entered a foreign exchange swap on a recent EUR750 million (USD857.18 million) bond offering to convert it into a synthetic yen-denominated obligation. François Schwartz, deputy senior v.p. of finance in Paris, said the company wanted to match a seven-year fixed-rate yen-denominated asset with a similar liability, but it is easier for Renault to issue in euros. "We don't think it is easy to tap the Japanese market for such long-duration [obligations]," Schwartz said. The swap matches the bond's seven-year maturity.
In the swap, Renault pays fixed-rate yen and receives the 4.625% fixed-rate euro-denominated coupon on the bond. Schwartz would not disclose the rate Renault is paying.
ABN AMRO and BNP Paribas, the co-lead managers on the deal, are also the counterparties on the swap. Schwartz said they were chosen because the swap is a crucial part of the bond offering since Renault wanted to create a synthetic yen obligation. The company has no formal minimum credit rating for counterparties, but looks at the duration of the swap when determining whether to enter a transaction with a specific firm, Schwartz added.
