Global electronic manufacturing titan Toshiba Corp., with over USD46 billion in assets, recently entered an interest-rate swap on the back of a JPY1 billion (USD7.8 million) euro medium-term note it launched via its subsidiary Toshiba Capital (Asia). The note is structured with an embedded option, making it callable after the first year, according to an official at Toshiba in Tokyo. In the interest-rate swap, Toshiba pays floating and receives a fixed rate equal to the 2% coupon on the note. The official declined comment on specific rates. The swap also matches the note's 10-year maturity.
Investor demand drives the type of notes the manufacturer issues and it is open to issuing exotic structures such as reverse floaters and step-up notes that offer enhanced yields for investors in Japan's low interest-rate environment. The official said it typically issues two JPY1 billion notes a month.
Toshiba converts 100% of its fixed-rate liabilities into floating, according to the official. Typical counterparties for swap transactions include Citibank, Deutsche Bank and JPMorgan.
