Derivatives deals of the year

In 1992, resourceful chief financial officers turned to an array of debt issues custom-fitted with derivatives to satisfy pension funds' and money managers' portfolio and yield enhancement demands. The deals also provided their own treasuries with cheap funds. Step-up callable notes were p...

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Bibliographic Details
Published in:The Institutional investor (U.S. ed.) 1993-01, Vol.27 (1), p.62
Main Author: Schultz, Janine
Format: Magazinearticle
Language:English
Subjects:
American dollar
Canadian dollar
Corporate finance
Derivatives
Institutional investments
Interest rates
International finance
Manycompanies
Swap arrangements
Yield curve
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Summary:In 1992, resourceful chief financial officers turned to an array of debt issues custom-fitted with derivatives to satisfy pension funds' and money managers' portfolio and yield enhancement demands. The deals also provided their own treasuries with cheap funds. Step-up callable notes were perhaps the most conspicuous example. Morgan Guaranty Trust Co. privately placed $50 million of 2-year notes whose redemption was linked to the differential between 7-year French and German swap rates. In October 1992, US West Financial Services was able to place $100 million of 2-year senior inverse floater notes linked to 2-year Canadian dollar swap rates. During the year, Ralston Purina Co., Dow Chemical Co., Ford Motor Co., and Eastman Kodak Co. were among the top 500 US companies that issued billions in prepaid swaps. In a similar strategy, corporations also issued billions of dollars worth of LIBOR-in-arrears swaps.
ISSN:0020-3580