Advance Auto Parts, an auto parts dealer in Roanoke, Va., is considering using interest-rate swaps to even the ratio of fixed-to-floating rate debt on its balance sheet, according to Sheila Stuewe, director of investor relations "Looking at possible swaps has become part of our constant review of our financing. We haven't decided on a schedule, but it is something we are looking at closely," Stuewe said.
The company's outstanding debt includes USD355 million in 10.25% bonds, which are non-callable until 2003 and may be a prime candidate for an interest-rate swap, according to Stuewe. In the swap, Advance would look to receive a fixed rate equal to the coupon on the bonds and pay a floating rate. "We see opportunities for a swap," Stuewe noted. But added that the company would be watching the Federal Reserve over the next two months, if things remain unchanged it is likely it would pull the trigger by the fourth quarter. The maturity on the swap is likely to match that of the bond offering.
In March, Advance Auto Parts issued a secondary offering of nine million shares. The sale garnered about USD95 million, which was used to pay down its debt.
Salomon Smith Barney, Morgan Stanley, Credit Suisse First Boston and Merrill Lynch are Advance's relationship banks. Stuewe declined to comment on whether any of the firms have been tapped to serve as a counterparty in a possible interest-rate swap.
