The South Carolina Public Service Authority, one of the largest U.S. state-owned utilities with USD2.2 billion in debt, may enter its debut interest rate swap on the back of a recent multi-tranche USD440 million debt offering. Although there is not a natural need to convert the debt to a floating-rate liability, as the new fixed-rate bonds were sold to refinance more expensive outstanding fixed-rate bonds, according to Rod Murchinson, treasurer in Moncks Corners, S.C., the utility would consider executing its first interest rate swap because of the potential for interest rates to fluctuate during the life of the bond, part of which has an 18-year maturity.
"We have never used swaps, but it's not something we've rejected and we could do something if the circumstances were right," he said, referring to a move in interest rates that would make taking on floating-rate risk attractive. He said it would be more likely for the utility to enter swaps based on the 18-year tranche, which was priced at roughly 4.60%. He declined further comment and Willard Strong, a spokesman, did not return calls.
