The Province of Ontario has entered two swaps to convert a USD250 million fixed-rate bond into a Canadian floater, and then into Canadian fixed-rate. Gadi Mayman, executive director in the capital markets group, said the province receives a fixed-rate and pays a LIBOR-based floating rate in the first swap. The LIBOR-based rate was then traded for Canadian bankers' acceptances, which were paid out in exchange for a Canadian dollar- denominated fixed rate, he said, declining to specify the rates.
The province converts bond issues into Canadian fixed-rate as a matter of policy, said Mayman. Performing the swaps on a U.S. dollar denominated bond also enabled the province to make savings of between five-10 basis points over issuing straight Canadian bonds, he added. The swaps mirror the five-year maturity of the bond. Deutsche Bank, Bank of Nova Scotia and TD Securities were the counterparties on the deal, as well as the lead managers for the bond. Officials at the three firms did not return calls or declined comment.
