Spintab, a Swedish mortgage bank, has entered a foreign exchange swap on the back of a floating-rate EUR750 million (USD782.96 million) bond to convert it into a synthetic Swedish krona-denominated bond. Martin Rydin, dealer in Stockholm, said the bank uses currency swaps on all of its non-Swedish krona offerings because it needs to fund its mortgage portfolio, which is denominated in that currency. Rydin would not disclose the exchange rate on the deal. CDC IXIS is the counterparty on the swap and was chosen because it has a AAA rating and provided good pricing, according to Rydin.
The mortgage bank also uses interest rate swaps to convert any fixed-rate bonds into synthetic floating-rate liabilities, Rydin explained. The EUR750 million offering has a floating-rate coupon of three-month Euribor plus 4 basis points. Spintab needs to raise approximately EUR5-6 billion this year in the bond markets, Rydin said, explaining that the total issuance varies depending on demand from customers for mortgages.
