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Swedish Company Enters FX Swap

11 Mar 2002

Investor, a Swedish industrial holding company with approximately SEK130 billion (USD13 billion) in assets, has entered a foreign exchange swap to convert the proceeds from a EUR500 million (USD435 million) bond it sold late last month into Swedish krona. A treasury official at the company in Stockholm said it converted the deal into its local currency because it maintains all of its debt in the Swedish currency, but chose to issue in euros because it wanted to extend its maturity curve and would not be able to raise that much long-term money in the Swedish market.

The swap matches the EUR500 million and 10-year maturity of the deal and was executed when spot was around SEK9.10. He declined to comment on whether Investor will leave the bond's 6.125% coupon as a fixed-rate liability except to say the company's debt portfolio is mostly floating-rate. The proceeds are being used to repay outstanding debt and for general funding needs.

Sweden is one of three countries (the others are Denmark and the U.K.) in the European Union that is not in the euro, although speculation is building that it will eventually join the common currency. "If we join the euro that will make my job a lot easier, but it is not our intention to speculate whether we will or will not join," the official said. The general consensus is that Sweden will join the euro at a rate between SEK8.60-8.80. The official declined to comment on how the company is preparing for it.

11 Mar 2002