ISBN 0-324-03375-3
There is no Case Teaching Package available for this case.
Length
This case is
5 pages in length.
Abstract
Martin Scheck, executive director of SBC Warburg's Debt Origination team had just negotiated an unusual Australian dollar $1,000,000,000 five-year global note issue the day before, which had been swapped into U.S. dollars, with Mehmood Nethani, Treasurer of Federal National Mortgage Association (FNMA). FNMA, a triple-A rated U.S. government-affiliated mortgage-finance corporation, was one of the largest issuers of debt in the world.
Martin was satisfied that there was a good chance that this successful offering would lead to more business between SBC and FNMA in the future. Scheck was sure that Nethani was happy with the deal. SBC Warburg had shown its ability to recognize a market opportunity in the Australian debt market, structure a transaction to fit the opportunity, and execute the deal on a global scale. FNMA's "all-in" cost of borrowing was comparable to what FNMA would have borrowed at in the U.S. dollar market. This cost included interest on the bonds, banking fees, and the cost of swapping the Australian dollars into U.S.
Completing a deal of this size and complexity-a huge Australian dollar deal for a U.S. issuer sold globally by a Swiss/British banking firm-was clearly a feather in the cap for SBC Warburg, particularly when the deal had been "snatched right out from under the noses of the big American investment bankers." Consolidation in the industry had greatly increased the level of competition among global banks. The ability to design, sell, and execute innovative transactions like this was becoming increasingly important. This deal clearly demonstrated SBC Warburg's capabilities as an integrated global bank, Scheck thought, and it was also valuable because it could lead to an expansion of the relationship with Fannie Mae, one of the largest private issuers of debt in the world.
Study Question:
- What things especially strike you as being significant in this case? Why?
The downloadable file for this case is in Microsoft® Word 7.0 for Windows®.
If you do not have Microsoft Word, you can download the free Microsoft® Word Viewer 97 right here: For Windows 3.x For Windows 95
©1996 South-Western College Publishing, All Rights Reserved webmaster@swcollege.com