IF IT DOESN'T SELL--SWAP IT
It's one of the latest fads in the Eurobond market:
repackaging cheap, fixed-rate bonds as floating-rate notes. The game,
growing in the past two years, hotted up in March with the glut of
unsaleable corporate straight bonds.
Morgan Guaranty in London claims to have done "hundreds of
millions of dollars"-worth of such business in recent months.
Citicorp has published a tombstone boasting $1 billion of
fixed-to-floating synthetic bonds sold in the past year. Paribas
Capital Markets says it did $500 million of dollar asset swaps in the
first six months of this year, and around $200 million in other
currencies. First Insterstate in London is also a major player;
it's done around $750 million of synthetic bond deals in the past
12 months.
Like all swaps business, it's an arbitage play, and the spur
to the market came with the widening of the Eurodollar/US...
