NEW YORK, Sept 24 (Reuters) - New York’s Metropolitan Transportation Authority is negotiating with Barclays Capital over whether the British bank will take over Lehman swap contracts as part of its purchase of the now bankrupt bank, the agency’s chief financial officer said on Wednesday.
Gary Dellaverson, who spoke to reporters after a board meeting, added that Barclays has agreed to replace Lehman as the remarketing agent for variable rate demand notes.
States, cities, hospitals, turnpikes and the like have all sold billions of dollars of interest rate swaps to lock in low rates and Lehman was a prominent player in this market. Its bankruptcy automatically terminates many of these contracts.
“This is a very disturbed market right now,” Dellaverson said. Barclays is spending about $1.3 billion to buy some of Lehman’s operations in New York City and New Jersey. On Sept. 22, Barclays said it would absorb Lehman’s municipal underwriting, trading, sales and derivative “solutions.” (Reporting by Joan Gralla; Editing by James Dalgleish)