CP FOR FLEXIBLE FUNDING 12 info exchange What's NewS Issue 8 August 1996 INTERNATIONAL ACCESS As one of the best-selling retail names \nM Europe, Rabobank is often invited to be^ one of the first bank issuers in given maturities desired by investors at any particular time. 'Once we or our lead managers have spotted the demand for a particular currency, size, coupon, structure, or maturity, we are often one of the first to make use of this funding window. The result,' says Dijkstra, 'is that we have excellent access to international capital. If we suddenly need to fund an acquisition, we'd have no problem borrowing as much as NLG 1 billion on short notice in a single shot.' ranging from Guilders to Hong Kong Dollars to South African Rand. INVESTOR INSIGHT What's more, the international capital markets operation has made global investor relations a top priority. Much effort is expended on road shows and otherwise to insure investors have a clear insight into Rabobank's overall strategy and an opportunity to ask Haijo Dijkstra - Rabobank is now a preferred name important questions. 'The aim is to build a positive sources by widening its presence on the recognition of who and what we are,' says international debt markets and by issuing Dijkstra. 'We have become a preferred in a number of different currencies name and want to keep it that way.' Rabobank's diversifying commercial paper program is oriented towards meeting the increasingly sophisticated demands of its large clients and towards meeting its own short-term funding requirements. It is also proving especially useful for fast-growing branches in the international network. Commercial paper is essentially short-term debt issued by Rabobank or arranged for other borrowers who need to raise cash. It is aimed at four main kinds of money market investors: other banks, corporate clients, institutional investors, and central banks. The primary attraction of commercial paper for the investor lies in its exceptional liquidity. Although it carries interest rates almost comparable to money market paper, it does not have the disadvantage of locking its holders into the full period of a fixed-term instrument. Because there is an active secondary market for CP - (managed by big brokers such as Citibank, SBC Warburg, and UBS Securities) - investors can rapidly access their underlying liquidity by selling the instrument at any time. ADDED APPEAL It is the corporate clients and banks who tend to most fully appreciate the flexibility under which they can quickly issue or dispose of commercial paper and thus take advantage of attractive alternative investment opportunities. For banks there is the added appeal that commercial paper can be used as collateral for credit facilities with the central bank. Moreover, when they are buyers of commercial paper, such instruments are hooked on the asset side of the balance sheet for only as long as they are actually held; fixed-period deposits, in contrast, require that cash be tied up for the same fixed period to meet solvency requirements. CENTRAL-BANK HOLDINGS 'Indeed, as more stringent BIS and other solvency requirements come into play, such instruments will play an increasingly important role,' says Rob Mayenburg, who manages CP activities in Utrecht. Central banks also buy the paper, which is available in multiple currencies, as a way to manage and invest their currency reserves. Although their main instrument for this purpose is other government treasury bills, 'I wouldn't be at all surprised to learn that many central banks were holding Rabobank-issued commercial paper,' remarks Mayenburg. INTERNATIONAL NETWORK TOOL Finally, institutional investors tend to buy and hold commercial paper as an alternative investment instrument in which to take a view on interest rate or currency movements. Thus, commercial paper acts as a sometimes useful supplement to their more traditional holdings in bonds and equities. Rabobank's foreign branches are finding commercial paper to be an especially useful instrument as they try to keep pace with their headlong growth. Australia, for example, has successfully launched several multicurency tranches of Rabobank-guaranteed commercial paper under an authorization ceiling soon to be increased to AUDI billion. Ireland is expected to follow soon. UNISONO - continued from page 3 BANK RELATIONS The company's growing complement of principals, such as Stork, Genencor and DAF, and its strengthening position on the Chinese market means it is a highly desirable target cliënt for banks. 'We've certainly come a very long way from the early years,' Litjens laughs. 'No one wanted us then. Fortunately, we met up with Sjouke Postma. At that time, Rabobank was the only bank willing to give us the financial backing we needed at reasonable rates. Perhaps their willingness to help was our agri-orientation. In fact, we were working for companies that were also Rabobank clients.' Litjens says the Unisono team appreciates the inherent understanding of food and agribusiness in the bank. 'And also the fact that everyone seems truly interested in what we are doing.' When asked, Litjens can only think of one area where the bank could do more: commercial finance. 'But that won't last forever,' he believes. 'I forecast that within the next five years we'll see far more commercially viable projects getting off the ground - with Rabobank in on the co-finance.'

Rabobank Bronnenarchief

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