The Council of Europe Development Bank has entered a cross-currency interest rate swap to convert a AUD100 million (USD55 million) fixed rate bond into a euro-denominated synthetic floater. Arturo Seco, deputy treasury manager at the Council in Paris, said the bank pays three-month Euribor and receives the 5.25% coupon on the bond. The swap mirrors the five-year maturity of the bond.
The Council entered the foreign exchange component of the swap as a matter of internal policy, said Seco, adding that it converts all non-euro denominated debt into its base currency. The bond is the third Australian dollar-denominated note the bank has issued this year.
The issue was demand driven, being targeted to retail investors in regions including the Benelux and Switzerland, said Gaelle Lamy, originator in the debt capital markets group at Deutsche Bank, in London. With the Swiss franc strong against the Aussie dollar, the bond denomination gives investors a pick-up, she noted. Deutsche Bank, which was the bookrunner and swap counterparty, approached the Council with this plan in place.
