✨ Financial Statements Notes
26 NOVEMBER NEW ZEALAND GAZETTE 3921
TRANSPOWER NEW ZEALAND LIMITED GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 1997
20. FINANCIAL INSTRUMENTS (cont.)
The notional contract amounts of interest rate swaps outstanding at balance date are:
| 1997 | 1996 | |
|---|---|---|
| $000 | $000 | |
| Interest rate swaps | 810,835 | 668,230 |
Cross currency interest rate swaps
Cross currency interest rate swaps are used to convert foreign currency denominated debt issued by the Group into New Zealand dollar denominated debt. Cross currency interest rate swap contracts eliminate foreign currency risk on the underlying debt by determining the New Zealand dollar equivalent of the final principal exchange at the time of entering into the contract.
The principal amounts of cross currency interest rate swaps outstanding at balance date are:
| Cross currency interest rate swaps | 1997 | 1996 |
|---|---|---|
| Principal receivable | 983,113 | 570,669 |
| Principal payable | (1,073,220) | (610,540) |
Forward rate agreements
Forward rate agreements are used to fix interest rates on the Group’s underlying debt for periods commencing in the future. In the normal course of business the Group enters into forward rate agreements to fix interest rates on floating rate debt for intervals of three months.
The notional contract amounts of forward rate agreements outstanding at balance date are:
| 1997 | 1996 | |
|---|---|---|
| Forward rate agreements | 70,000 | 845,000 |
Interest rate options
The Group enters into interest rate options to manage interest rate re-pricing risk. The Group purchases interest rate options to minimise the impact on finance costs arising from floating rate debt if interest rates were to rise in the future. In the normal course of the Group’s interest rate risk management the sale of interest rate options is restricted by the requirement to simultaneously purchase an interest rate option of the same notional value.
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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
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🏭 Trade, Customs & IndustryFinancial Instruments, Interest Rate Swaps, Cross Currency Interest Rate Swaps, Forward Rate Agreements, Interest Rate Options, Transpower New Zealand Limited