GlaxoSmithKline, the pharmaceutical company, may enter a swap to hedge the interest-rate risk on a GBP1 billion (USD1.46 billion) fixed-rate bond it recently offered. In the swap the company would look to receive the coupon on the bond, 5.25%, and pay a LIBOR-based floating rate. Sarah-Jane Chilver-Stainer, group treasurer in London, said GSK sold the 30-year bonds with a fixed coupon because it was attracted by the rate. Credit Suisse First Boston and Schroder Salomon Smith Barney led the deal. It will keep the proceeds in sterling, which Chilver-Stainer called the company's natural currency. She declined comment on the rate it would look to pay and the maturity.
The bond offering is GSK's first since it was created by the merger of Glaxo Wellcome and SmithKline Beecham last December. The merged entity is reviewing its interest-rate risk management strategy following its first bond offering since the merger, said Roger Emerson, senior v.p. in the treasury. "SmithKline and Glaxo had different hedging strategies," he said, adding that generally speaking SmithKline had been more aggressive. He is from the Glaxo side and Chilver-Stainer is from the SmithKline business. He declined to comment on how GSK's hedging policy will differ from its predecessors' policies, citing the pending release of the company's first full-year financial statements in February.
