✨ Financial Statements
TRANSPOWER NEW ZEALAND LIMITED LINES BUSINESS
NOTES TO THE FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 30 JUNE 2003
20. FINANCIAL INSTRUMENTS continued
The notional gross contract amounts of interest rate swaps outstanding at balance date are:
| LINES BUSINESS 2003 | LINES BUSINESS 2002 | |
|---|---|---|
| $000 | $000 | |
| Interest rate swaps | 3,610,080 | 2,615,780 |
Cross currency interest rate swaps
Cross currency interest rate swaps are used to convert foreign currency denominated debt issued by Transpower 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 | |
|---|---|
| Principal receivable | 573,686 |
| Principal payable | (629,618) |
| LINES BUSINESS 2003 | LINES BUSINESS 2002 | |
|---|---|---|
| $000 | $000 | |
| Principal receivable | 573,686 | 921,286 |
| Principal payable | (629,618) | (916,138) |
Forward rate agreements
Forward rate agreements are used to fix interest rates on Transpower’s underlying debt for periods commencing in the future. In the normal course of business Transpower 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:
| LINES BUSINESS 2003 | LINES BUSINESS 2002 | |
|---|---|---|
| $000 | $000 | |
| Forward rate agreements | 60,000 | 10,000 |
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 management, the sale of interest rate options is restricted by the requirement to simultaneously purchase an interest rate option.
The notional contract amounts of interest rate options outstanding at balance date are:
| LINES BUSINESS 2003 | LINES BUSINESS 2002 | |
|---|---|---|
| $000 | $000 | |
| Interest rate options | 110,000 | 85,000 |
Foreign exchange forward contracts
Transpower uses foreign exchange forward contracts to fix the New Zealand dollar cost of foreign denominated capital equipment and stock purchases and to eliminate foreign currency risk on debt issued in foreign currency.
The contract amount of forward foreign exchange contracts outstanding at balance date are:
| Forward foreign exchange contracts |
| LINES BUSINESS 2003 | LINES BUSINESS 2002 | |
|---|---|---|
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2003, No 162
Gazette.govt.nz —
NZ Gazette 2003, No 162
✨ LLM interpretation of page content
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Transpower New Zealand Limited Lines Business Notes to the Financial Statements
(continued from previous page)
🏭 Trade, Customs & IndustryFinancial statements, Financial instruments, Interest rate swaps, Cross currency interest rate swaps, Forward rate agreements, Interest rate options, Foreign exchange forward contracts