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EIB ‘Switchable’ Notes Hand Issuer, Investors Yearly Rate Wager
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Posted by CFO WOrld
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vendredi, 30 juillet 2010 |
 The European Investment Bank issued $300 million of bonds known as switchable notes that give it an annual option to change the fixed return to a floating rate.
Investors can then convert the 30-year securities back to a fixed-rate return in the subsequent year, according to the prospectus for the privately placed notes. The deal allows investors to bet on the direction of the London interbank offered rate, or Libor, which was set at 0.46563 percent today for three-month dollar loans.
“It’s like an ongoing callable deal but instead of having to replace the deal the money stays with us for the 30 years,” said Richard Van Blerk, an official in the dollar-funding division at the EIB in Luxembourg. “Investors can bet on Libor rates going up in the long term through holding such a structure.” (...)
> End of the article on Bloomberg Businessweek
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