Stilwell Financial may convert its next USD250 million bond later this year, however it has decided it will probably not enter a swap to convert its most recent fixed-rate bond. Daniel Connealy, cfo in Kansas City, said it is keen to use interest-rate swaps to convert its debt to floating, but has decided that with over 50% of its exposure in floating rate it will hold off in case the rating agencies think it has too much exposure to rate hikes. The parent of mutual fund company Janus raised USD200 million of seven-year money late last month, at 7.75%.
"A lot of bankers have called and suggested [swaps], but our inclination at this time is that we're probably going to keep this issue fixed," Connealy said, declining to name the firms. The fixed-rate offering brings the company's fixed-to-floating ratio to an optimal level of roughly 50%, as the company entered a swap earlier this year to convert a USD400 million bond it had sold last year into a floater. "Our peer group probably only does 25% in floating," he said, noting Stilwell is on the high side at 50%.
Connealy said retail giant Janus, which has roughly USD145 billion under management, does not use over-the-counter derivatives for its funds. Moody's Investors Service rates Stilwell Baa1 and Standard & Poor's rates it A minus.
