World Bank Executes Hedge

GLOBALCAPITAL INTERNATIONAL LIMITED, a company

incorporated in England and Wales (company number 15236213),

having its registered office at 4 Bouverie Street, London, UK, EC4Y 8AX

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement | Event Participant Terms & Conditions

World Bank Executes Hedge

The World Bank Group has entered a cross-currency interest-rate swap to convert a ZAR150 million (USD14.3 million) fixed rate bond into a euro-denominated synthetic floater. Hynd Bouhia, senior financial officer in Washington, said the bank pays a LIBOR-based floating liability in return for the 12.5% coupon on the bond. The swap mirrors the bond's two-year and three-month maturity.

It entered the interest rate swap to hedge interest rate risk, while the currency is converted to U.S. dollars as a matter of bank policy, said Bouhia. The bank continually looks for opportunities to meet its borrowing requirements, which is primarily determined by its lending activities for development projects. Issuing bonds in emerging market currencies, such as South African rand, assists the development of these markets by aiding liquidity, she noted. The Royal Bank of Canada lead managed the bond.

Related articles

Gift this article