Groupe Casino, the French retail superstore, has entered an interest-rate swap to convert a fixed-rate bond it issued earlier this month to a floating-rate liability. Regis Taillandier, head of funding in St-Etienne, said the company converted the EUR400 million (USD350 million) transaction into a EURIBOR-based rate through over-the-counter swaps with the lead managers on the deal: JPMorgan, Société Générale, Credit Lyonnais and Natexis Banques Populaires. A Natexis official confirmed the swap while a SocGen official declined to comment. JPMorgan and Société Générale officials on the swap did not return calls.
In the swap, Casino will receive the 6% coupon on the bond and pay a spread over three-month EURIBOR. The swap matches the EUR400 million size and 10-year tenor of the bond offering. Taillandier said it uses a EURIBOR-plus basis for nearly all its funding. He added the proceeds will be left in euros, the company's home currency. "The best way to take risk is on a floating basis," he noted. The swap was done as an all-in package with the bond offering. Casino uses the swaps market when necessary and would also use foreign exchange swaps to convert a deal into euros if it were to raise capital in other currencies.
The counterparties were selected from among the company's core relationship banks, although Casino also pays attention to distribution strength when selecting fixed-income managers, Taillandier said. "We try to always have a balance between relationship banks and big names in the bond market," he noted. Standard & Poor's rates Casino BBB.
