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Swedish Mortgage Bank Enters FX Swap; Plans Future Swaps

18 Aug 2002

Spintab , a Swedish mortgage bank, has entered a foreign-exchange swap on the back of a floating-rate EUR50 million (USD48.85 million) medium-term note to convert it into a Swedish krona-denominated bond and will continue to enter similar swaps throughout the year. Stefan Abrahamsson, dealer in Stockholm, said the bank uses currency swaps on all of its offerings within its MTN program because it issues the bonds in euros, dollars or other major currencies, but needs to fund its mortgage portfolio in Swedish krona. Abrahamsson would not disclose the exchange rate on the swap. If the bank issues fixed-rate MTNs in the future, it will also use interest-rate swaps to convert fixed-rate exposure into floating, he added.

Spintab's MTN program has a capacity of EUR50 billion, with EUR10 billion outstanding. Abrahamsson declined to disclose the funding requirements of the bank for the remainder of the calendar year, but noted that Spintab is a frequent issuer of MTNs. The mortgage bank has a group of 40-50 banks to which it offers its MTN business and approximately 20-25 banks within that group have actively participated in deals.

The recent EUR50 million offering was priced with a floating interest-rate of Euribor plus three basis points. Abrahamsson would not disclose the counterparty on the transaction but noted that Lehman Brothers underwrote the notes.

18 Aug 2002