U.K. Thrift Enters Swap On Dollar Bond
Bradford & Bingley, a U.K. building society, has entered a cross-currency swap to convert a recent USD500 million bond into a synthetic sterling liability. Peter Fullerton, head of dealing in the treasury in Bingley, U.K., said the thrift issued the bond in dollars to diversify its investor base to include Asian investors, where there was demand for its paper. The thrift had to use an fx swap because its loan portfolio is denominated in sterling. Fullerton said the exchange rate on the transaction is USD1.58, which is the spot rate of Nov. 19, when the bond was issued. The swap also gave Bradford & Bingley a marginal cost saving.
Fullerton would not disclose the counterparty on the swap. He said the building society requires that counterparties have strong credit ratings, but would not disclose its minimum rating requirement.