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Canadian Telco Enters FX Swap

08 Oct 2001

Barnaby, British Columbia-based TELUS Corp. recently entered a foreign exchange swap to convert a pair of multi-billion dollar U.S. bonds into a synthetic Canadian dollar liability. Robert Gardner, director of finance, said, "it's become a pure Canadian dollar liability. It's fully hedged." TELUS executed a six-year swap that matches the six-year USD1.3 billion 7.5% notes and a 10-year swap that matches its 2011 USD2 billion 8% notes.

In the swap TELUS receives Canadian dollars at a fixed rate for the duration of the swap, in exchange for U.S dollars, Gardner said, declining to detail the rate. It makes sense for the company to swap the U.S. dollars into Canadian dollars because it operates solely in Canada and all its revenues are in Canadian dollars. The counterparties in the swap are Toronto Dominion Securities and J.P. Morgan. Gardner said both firms also were the main underwriters for the bond offerings. Spokesmen at the firms did not return calls.

The proceeds from the issues were used to repay existing short-term bank debt and for general corporate and working capital purposes, according to Gardner. It has CAD9 billion in outstanding debt. TELUS provides telecommunication services in Western Canada. It also provides voice, data, Internet and wireless services to central and eastern parts of the country.

08 Oct 2001

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