Landesbank Baden-Württemberg has entered an interest rate swap on a recent CHF300 million (USD229.05 million) bond to convert it into a synthetic floating-rate liability. Marcel Kullmann, head of international funding in Stuttgart, Germany, said the firm pays a LIBOR-based floating rate and receives the 2% coupon on the bond. The tenure of the swap matches the seven-year maturity of the bond.
ABN AMRO and Credit Suisse First Boston are the counterparties on the swap. Kullmann said they were chosen because they lead managed the bond deal. "We tend to swap with the leads as they deliver a good package in general," he said. Kullmann said the bank likes to put collateral agreements in place with derivatives counterparties.
