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Derivatives

U.K. Retailer Uses I-Rate Swap To Up Floating Exposure

John Lewis, a U.K.-based retailer, has entered an interest rate swap to convert a GPB100 million (USD155.54 million) bond offering into a synthetic floating-rate liability. Peter Ford, treasurer in London, said the company chose to enter the swap to rebalance its ratio of floating-to-fixed rate debt. The retailer targets a 50/50 mix and its floating rate portion had fallen below 50%. Ford declined to elaborate. This is the first time John Lewis has converted an entire bond deal into floating-rate debt, but that is just a reflection of the amount the company needed to convert to rebalance its fixed-to-floating ratio, Ford explained.

Ford said that the counterparties on the swap are HSBC, The Royal Bank of Scotland Financial Markets and Barclays Capital and they were chosen because the company has relationships with them.

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