Norwegian export credit agency Eksportfinans plans to issue callable Japanese yen-denominated medium-term notes and convert them to synthetic dollar floating-rate liabilities using cross-currency interest-rate swaps. Anders Bruun-Olsen, senior v.p. and head of the funding department in Oslo, said the agency has USD800 million of funding left to raise before year-end. The agency plans to tap the Japanese market to take advantage of strong demand for triple-A rated debt and because it has a good reputation in Japan.
Since the MTNs it plans to issue will be callable the agency will arrange a multi-callable swap with its counterparty, Bruun-Olsen explained. If the counterparty decides to call the swap then Eksportfinans will call the bond, he continued. This structure is attractive to investors because, since they are effectively short a Bermuda call on the MTN, they receive additional yield pick up. The agency plans to enter the swap because it mainly lends in dollars. Some 80% of its USD8.5 billion debt portfolio has been converted to dollars via swaps.
Eksportfinans chooses derivatives counterparties based on its own credit analysis and price. Bruun-Olsen declined to name derivatives counterparties it might use but said its looking for an underwriter with a substantial presence in Japan, such as Mizuho Financial Group, to lead manage the notes.
