Nordic Investment Bank, a multilateral financial lending institution, has entered a cross-currency interest rate swap to convert a NOK400 million (USD53.28 million) bond into a synthetic floating-rate obligation. Samu Slotte, senior funding officer in Helsinki, said the agency may enter similar swaps this calendar year since it has EUR1 billion in funding needs and may tap the capital markets. Slotte, however, said it has not yet been determined how much would be raised from the capital markets and how much would come from its cash reserves, which total EUR2.3 billion.
The agency always converts fixed-rate debt into floating to match its loan portfolio, Slotte explained. In this particular transaction, Nordic Investment Bank is receiving the coupon on the bond--6.25%--and paying a floating rate. He would not disclose the currency into which the bond has been converted, but all offerings are exchanged into euros, dollars or one of the Nordic currencies. The agency has a minimum rating requirement of single A and uses an internal rating system to select counterparties.
