Yorkshire Building Society has entered a foreign exchange swap to convert its first euro-denominated issue into sterling. Chris Parrish, group treasurer in Bradford, U.K., said the exchange rate for conversion of the EUR500 million (USD484.65 million) bond offering was set on Sept. 11 at the forward exchange rate for Sept. 26, when the offering will settle. That rate was approximately EUR0.6275. Yorkshire Building Society needs to convert its funding into sterling because its lending portfolio is denominated in sterling, Parrish added.
The bond offering followed the society's first U.S. dollar-based benchmark, which it completed in February and sold to Asian-based investors. The thrift entered a foreign exchange swap on this transaction as well to convert it into sterling, Parrish said. He explained that the purpose of the two offerings is to establish benchmarks in the currencies to meet and also increase international investor demand for its debt. He said future funding in dollars and euros would likely be privately-placed medium-term notes. The society does not have funding needs for the remainder of the calendar year.
HSBC was the lead manager on the offering and also the counterparty on the swap. The society attempts to use counterparties rated double A or higher, Parrish said.
