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U.K. Savings & Loan Puts Fx Swap On The Books

10 Nov 2003

Northern Rock, a U.K.-based lending and savings bank, has entered a foreign exchange swap on a recent USD600 million floating-rate five-year bond. Phil Horner, head of derivatives in Newcastle-Upon-Tyne, said it issued a dollar-denominated bond to increase investor diversity. Since the bank only has operations in the U.K., it enters swaps to switch foreign currency denominated liabilities into sterling debt.

In the swap, the bank receives three-month dollar LIBOR and pays a floating rate in sterling. Horner declined to comment on the rate paid in the swap. The maturity of the swap matches the bond, he noted. Citigroup and HSBC were the bookrunners on the bond, but Horner declined to comment on the swap counterparties.

10 Nov 2003