POSCO, a Seoul-based steel manufacturer with over KRW8 trillion in assets, entered a USD174 million foreign exchange swap for its USD2.1 billion debt portfolio two weeks ago. In the swap, which matures in July 2004, the firm pays yen and receives dollars at a JPY131.42 exchange rate. Ro Young Il of the international finance department in Seoul, said POSCO entered the swap to reduce the proportion of its debt in dollars because of the weak yen and low interest-rates.
Approximately 60% of POSCO's debt portfolio is held in dollars, but it wants to reduce this further, according to Il. "60% is still too high." Il continued that the company will look to enter additional foreign exchange swaps in the next two to three months but declined to elaborate on the target dollar level of the portfolio.
Il declined to comment on potential counterparties for future transactions but said, "we'll look at offers from several houses and then select a deal based on the best conditions and best pricing.
