The Council of Europe Development Bank has entered a cross-currency interest rate swap to convert a recent USD750 million bond offering into a synthetic euro-denominated floating rate liability. Arturo Seco, deputy funding manager in Paris, said the council entered the transaction because it converts all non-euro debt into its home currency and fixed-rate debt into floating. In the swap, the council is receiving the 3.75% fixed coupon on the bond and paying three-month Euribor plus a spread.
BNP Paribas and Dresdner Kleinwort Wasserstein are the counterparties on the swap, as well as the lead managers on the bond deal. Seco said they were chosen as swap counterparties because they were the lead managers and were vying for the business. He explained that the council has no minimum credit rating for counterparties because it uses collateral agreements.
