Bradford & Bingley, a U.K. financial services firm, has converted a three-year EUR300 million (USD344 million) floating-rate note into a synthetic sterling-denominated liability. Peter Fullerton, head of dealing in Bingley, said, "The spread on sterling is marginally in our favor." The maturity of the swap will match that of the note.
In the swap, Bradford & Bingley pays in floating rate euros and receives floating rate sterling. It issued the note to finance general business. Fullerton said, "Since we are a mortgage lender with most of our assets and liabilities priced at a floating rate, it makes sense to borrow at a floating rate."
Credit Suisse First Boston was the bookrunner for the note. The note pays three-month Euribor plus 12.5 basis points. Fullerton declined to comment on the swap counterparties.