Bank Nederlandse Gemeenten, a Dutch public sector finance agency, has entered swaps on two recent bond deals to convert them into euro-denominated floating rate liabilities. The agency entered a cross-currency interest rate swap on a CHF300 million (USD228.52 million) bond and an interest rate swap on a EUR150 million (USD173 million) issue. Bianca Ydema, senior manager in capital markets in the Haag, Netherlands, said it is the agency's policy to convert fixed-rate issues into floating-rate liabilities and any foreign currency into euros, its domestic currency. Interest rate risk is managed separately, Ydema explained.
In the swap on the CHF300 million offering, BNG receives the 2% coupon on the bond in Swiss francs and pays a Euribor-based rate. For the EUR150 million offering, BNG receives the 2.125% coupon and pays a Euribor-based rate. UBS Warburg was the lead manager on the euro-denominated offering and ABN AMRO and UBS were the co-lead managers on the Swiss franc deal. Ydema would not reveal the swap counterparties, but explained swap counterparties need to be rated AA.
