KommuneKredit, an association which provides financing to Danish government organizations, will be using both cross-currency and interest-rate swaps on approximately EUR800 million (USD792 million) in long-term debt throughout the remainder of the calendar year. KommuneKredit issues roughly EUR6 billion in debt per year, EUR2 billion of which is long-term debt. The association enters either interest-rate swaps, fx swaps or both on approximately 80% of its long-term debt, said Jette Moldrup, v.p. in treasury in Copenhagen. The company has raised approximately half of its yearly requirement.
Moldrup explained that the company uses foreign exchange swaps to convert the proceeds from the bonds into U.S. dollars, euros and Danish krone. The company also enters interest-rate swaps to convert fixed-rate into floating-rate debt. She declined to be say whether it would convert the whole EUR800 million.
At the beginning of July, KommuneKredit entered a cross-currency interest-rate swap to convert a JPY500 million (USD4.2 million) offering into U.S. dollars. Moldrup declined to disclose the exchange rate or what floating rate the company is paying and what fixed rate it is receiving. She said the Japanese market has had an appetite for yen-denominated debt from the Danish lender for the past 10 years and therefore has an established brand name there. In addition, she said investors like the company's triple A rating. Moldrup would not disclose the counterparty to the swap, but said KommuneKredit requires a minimum credit rating of double A for counterparties.
