Bradford & Bingley has entered a cross-currency swap on a recent floating-rate USD300 million bond offering to convert it into a synthetic sterling-denominated liability. Paul Rixon, investment and derivatives manager in Bingley, U.K., said the thrift issued the obligation in dollars because there was demand from European and Asian-based investors for dollar-denominated debt, but needed to convert the offering into sterling because that is its operating currency. "We can issue in any currency that suits," Rixon said, adding that it is the firm's policy to convert any proceeds into sterling.
The maturity of the swap matches the three-year tenure of the bond, which pays investors LIBOR plus 10 basis points. The exchange rate on the swap is USD1.6250, Rixon said. The U.K. thrift does not disclose counterparties on swap transactions, he said, adding that it generally requires counterparties to have a credit rating of single A or better.
