Nomura Securities International is reportedly taking a novel turn on a $6 billion, one-year line of credit for Bayerische Landesbank, accepting commercial-, asset- and mortgage-backed securities as collateral, according to BondWeek, an LMW sister publication. Current and former Nomura fixed-income executives said the agreement called for Nomura to provide the 364-day revolver for a fee of two basis points, or $1.2 million.
The transaction began in mid-July and expires in July of 2002. The shift from being a recipient of committed financing to a guarantor of capital would represent a departure for short-term A2-rated Nomura, which has had well-documented troubles simply financing itself over the past several years. Ray Carli, Nomura's treasurer in New York, was on vacation last week, and unavailable for comment. Jose Lopez, head of BLB's U.S. Treasury department in New York, referred to the transaction as "highly confidential" and declined further comment.
To Nomura the loan represents a low-risk proposition, according to an individual familiar with Nomura's thinking on this agreement. For an immediate fee of $1.2 million, they agree to offer funding to a company whose debt is rated Aaa/AAA, and which carries the explicit backing of the Federal Republic of Germany. Similarly, the agreement purportedly offers Nomura an interest rate of the Fed funds rate plus 50 basis points on any money drawn down, certainly higher than BLB would ordinarily have to pay to secure one-year financing.