✨ Financial Statements Notes
3920 NEW ZEALAND GAZETTE No. 165
TRANSPOWER NEW ZEALAND LIMITED GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 1997
20. FINANCIAL INSTRUMENTS (cont.)
Transmission hedge pricing risk policy
To limit the Group’s risk from offering transmission hedge contracts the Board has established maximum loss levels arising from these contracts. To ensure the maximum loss level is not exceeded the transmission hedge contract sets a maximum payout level per period. The cumulative cash flows received and paid under transmission hedge contracts are monitored on a daily basis.
c) Financial instruments which manage currency, interest rate and liquidity risk
The Board of Directors have authorised the use of the following financial instruments to manage currency risk, interest rate risk and liquidity risk:
On Balance Sheet financial assets and liabilities
Term debt
The Group has four active debt facilities: a European Commercial Paper Programme, Euro Medium Term Note Programme, a Domestic Medium Term Note Programme and a Domestic Multi-Option Facility. The Group uses these facilities to issue debt securities into different global debt markets.
In the event the Group is unable to utilise these facilities the Group has established two committed credit facilities. One facility is a NZ$500,000,000 Multi-option Facility with a syndicate of domestic and offshore banks of which NZ$150,500,000 is underwritten and which was unutilised as at 30 June 1997 and 30 June 1996. The second facility is a Standby Facility for US$190,000,000 (NZ$280,277,327) of which the total amount was unused at 30 June 1997 and 30 June 1996.
Term investments
The Group from time to time invests surplus cash arising from its core operations and from active liquidity management in wholesale bank deposits and securities for periods of up to one year.
Off Balance Sheet financial assets and liabilities
Interest rate swaps
Interest rate swaps are used to change the interest rate structure on physical debt issued by the Group. The interest rate on debt is either converted from floating rate to fixed rate or vice versa through entering into an interest rate swap. In the normal course of the Group’s hedging activities interest rate swaps are entered into for periods of up to ten years.
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VUW Te Waharoa —
NZ Gazette 1997, No 165
NZLII —
NZ Gazette 1997, No 165
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Notes to the Financial Statements
(continued from previous page)
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