- 15 -15 partner's, fiscal year). IV. ASA's Transactions A. Purchase of PPNs On April 25, 1990, ASA purchased $850 million of 5-year PPNs with put options exercisable on November 20, 1991. Of these PPNs, $350 million were issued by the Long Term Credit Bank of Japan (LTCB) and rated AA by Standard and Poor's. The remaining $500 million of PPNs was issued by Sumitomo Bank Capital Markets, Inc. (Sumitomo), and rated AA+ by Standard & Poor's. Merrill Lynch induced LTCB to issue the PPNs by arranging basis swaps (i.e., the exchange of payments based on one variable interest rate for payments based on another variable interest rate) that converted LTCB's cost of capital for issuing the PPNs to an attractive sub-LIBOR interest rate. These swaps provided that Merrill Lynch would pay LTCB an amount equal to the coupon rate of the LTCB PPNs. In exchange, LTCB paid Merrill Lynch a sub-LIBOR rate on the face amount of the PPNs. B. Sale of PPNs and Acquisition of LIBOR Notes On May 8, 1990, the ASA partnership committee met in Bermuda and adopted a resolution authorizing and directing the sale of the PPNs for consideration consisting of approximately 80 percent cash and 20 percent LIBOR notes. Between May 17 and 24, 1990, ASA sold the PPNs to Mitsubishi Bank, Ltd. (Mitsubishi) and Banque Francaise du Commerce Exterieur (BFCE). Standard andPage: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
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