Sydkraft, Sweden's largest power company, has entered a cross-currency basis swap to convert proceeds from a EUR300 million ($273 million) bond offering it made earlier this month into Swedish krona. Through the swap Sydkraft converted its debt liability from 60 basis points over Euribor into a synthetic floater at 68 basis points over Swedish krona LIBOR, says Gunnar Milssomstig, deputy group treasurer. The identity of the swap counterparty could not be determined by press time.
Sydkraft entered the swap because it is using the proceeds of the bond issue to pay down Swedish krona-denominated liabilities. These include short-term debt it arranged last year to finance its SEK1.4 billion ($133 million) acquisition of Norrkoplg, one of Sweden's biggest electricity distributors, says Hans Borgstrom, group treasurer in Malmo. "We are financing a number of [acquisitions] on a monthly basis that were scattered over a number of years," adds Milssomstig.
The company issued five-year bonds, priced at 99, via lead underwriter Nordea Bank. Nordea, the recently merged union betweenUnibank of Denmark, Merita Bank of Finland, Nordbanken of Sweden and Christiania Bank Kreditkasse of Norway, also arranged the financing for the Norrloplg acquisition, says Milssomstic.