Municipality Finance, a Finish government-backed lending body that provides financing to local government departments, is planning to enter a swap to convert liabilities on a floating-rate Swiss franc-denominated bond into a synthetic floating-rate euro-denominated obligation.Toni Heikkilä, senior manager in Helsinki, said the lender recently raised CHF100 million (USD60 million) in a fixed-rate deal by tapping a CHF200 million bond it sold last year and now is in the process of converting it to a floating euro liability. "When we do our new funding, we almost always swap it into floating euros," he said.
The municipal finance body, or Kuntarahoitus, has already entered a swap with ABN AMRO to convert the fixed Swissy proceeds into floating Swissy and now wants to go a step further to get it into euros. It did not enter a cross-currency interest-rate swap because Heikkilä said it hopes to achieve a better rate, although he would not be more specific. It is now looking to receive euros and pay a three or six-month Euribor-based rate.
In the swap with ABN, Municipality Finance will receive the six-year, 2.75% coupon on the bond and pay a six-year, sub-LIBOR rate which Heikkilä declined to disclose.
