The swap would hedge the Horana plant
quote s interest rate risk, by converting its US$ 10.8 mn floating rate, which is pegged to the three months London Inter Bank Offered Rate debt into a fixed rate.
rnrnAitken Spence opted for the move, after US dollar interest rates reached historic lows following the US economic downturn, company officials said.
rnrnThe company hopes to guard itself against future rate hikes by fixing the rate through the swap.
rnrnLast August, People
quote s Bank treasury concluded their maiden derivatives deal in a similar interest rate swap for the Ace Power Anuradapura.
rnrnDerivative deals, even though very popular in the developed markets, have failed to take off in Sri Lanka except for a few isolated deals in the past.rnrn