Indianapolis-based Great Lakes Chemical Corp., a producer of specialty chemicals for flame retardant devises, such as fire extinguishers, is considering tapping the interest-rate derivatives market for its first foray into any type of derivatives product. John Kunz, treasurer, said the company's decision to begin eyeing interest-rate swaps has been prompted by a continued flattening of the U.S. Treasury yield curve.
Great Lakes would look to enter interest-rate swaps in which it pays a floating rate and receives fixed to hedge interest-rate risk on its debt portfolio. It has USD676 million in total long-term debt. The company would first look to hedge the risk on its USD400 million 2009 7% notes offering.
Kunz said an interest-rate swap would likely match the 10-year maturity on the offering. The company is not planning another issue this year. "An interest-rate swap is something we've always had an appetite for, but it's the risk in doing it that needs to be carefully considered," Kunz said. The company has a single A credit rating fromMoody's Investors Service.
