✨ Financial Statements
4894
NEW ZEALAND GAZETTE, No. 169
12 DECEMBER 2006
Notes to and Forming Part of the Financial Statements
For the year ended 30 June 2006
POWERCO
ELECTRICITY DIVISION
7 Interest rate swaps
Historical swaps floating to fixed swaps which are cancelled by number six above on match term and rolls basis. Hedge accounting is not applied to these swaps. The nominal value of the swap is $57,600,000 (2005: $169,200,000)
The fair value of the swap is $168,371 (2005: -$3,108,446)
Total notional principal of instruments recognised $1,498,511,532 (2005: 1,500,671,532)
Total fair value of instruments recognised -$29,233,710 (2005: -$43,066,859)
All cash flow hedges above are on matched terms. The maturities are the same as the financial liabilities recorded in note 12. The Group’s policy is to refloat any fixed rate debt, thus giving a totally floating portfolio, then re hedge as per parameters in the treasury policy. This has the effect that some fixed rate hedges are applied against floating rate hedges. In line with NZ IAS39 these are not hedge accountable and thus movements in the mark to market value of these is passed through to the Income Statement.
The Group’s New Zealand Dollar (NZD) and foreign currency fixed rate debt is converted to floating NZD debt through the use of derivatives, with these exactly matching the term and nominal value of the debt. At the point of issue the nominal value of the bonds was equivalent to the fair value, and the fair value of the derivative was zero. The marking to market of the derivatives outlines movements in interest rates or currency rates.
Powerco bonds are able to be traded on the NZDX and an active secondary market exists. This valuation method assumes a constant credit rating.
b) Currency swaps
Under currency swap contracts, the consolidated entity agrees to exchange specified principal and interest foreign currency amounts at an agreed future date at a specified exchange rate (fixed for floating). Such contracts enable the consolidated entity to mitigate the risk of adverse movements in foreign exchange rates. The following table details the currency swaps outstanding as at reporting date.
Outstanding contracts as at 30 June 2006
| Average Interest rate NZ$000 | Average exchange rate NZ$000 | Contract Value NZ$000 | Fair Value NZ$000 |
|---|---|---|---|
| BKBM + 88 basis points | 0.5947 | 211,872 | (21,357) |
Outstanding contracts as at 30 June 2005
| Average Interest rate NZ$000 | Average exchange rate NZ$000 | Contract Value NZ$000 | Fair Value NZ$000 |
|---|---|---|---|
| BKBM + 88 basis points | 0.5947 | 211,872 | (28,966) |
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2006, No 169
Gazette.govt.nz —
NZ Gazette 2006, No 169
✨ LLM interpretation of page content
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Powerco Electricity Division Borrowings
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💰 Finance & RevenueFinancial Statements, Borrowings, Non-current liabilities, Current liabilities, Subordinated bonds, Guaranteed bonds, US Dollar private placement notes, Commercial bank debt, Bank overdraft, Commercial paper facility, Derivative Financial Instruments, Interest rate swaps, Cross Currency Interest rate swaps, Cash flow hedges, Fair value hedges