The African Development Bank has entered an interest rate swap on a recent CHF300 million (USD226.1 million) bond to convert it into a floating rate liability. Thiebaut Julin, manager of the capital markets division in Paris, said the agency always enters interest rate swaps on its fixed-rate debt offerings because it has a policy to maintain floating-rate liability exposure. In the swap, ADB pays LIBOR minus a spread and receives the 1.5% coupon on the bond. The tenure of the swap matches the bond's five-year maturity, Julin noted.
BNP Paribas and UBS Warburg are the counterparties on the swap, as well as the lead managers on the bond offering. ADB selects derivatives counterparties based on a minimum credit rating of AA minus, Julin explained. The agency has USD2.2 billion in funding needs for the remainder of the year.
