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Derivatives

U.K. Sugar Company Uses FX Swaps

Tate & Lyle, a London-based global sugar, cereal sweetener and starch processing group, recently issued GBP200 million (USD300 million) in bonds and used foreign exchange swaps to convert the majority of proceeds into U.S. dollars and euros. Philip Brown, head of treasury in London, said there was investor demand for sterling debt and the fx swap offered the company the best execution on the deal. Brown explained that Tate & Lyle's primary borrowing currencies are U.S. dollars and euros. If it issues in a different currency it often uses fx swaps to convert offerings back into those currencies. The company, however, does keep a portion of its debt in sterling, although Brown declined to disclose that figure. Brown would not elaborate on the percentage of the offering converted into U.S. dollars and euros.

HSBC and Schroder Salomon Smith Barney were the underwriters on the bond offering. Brown would not disclose the counterparties for the fx swap or reveal the exchange rate of the swap.

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