New Zealand Gazette – 2009 – No. 116

Page 2677

✨ Financial Instruments Notes



10 AUGUST 2009 NEW ZEALAND GAZETTE, No. 116 2677

Notes to the financial statements

in New Zealand Dollars ($000’s)

18 Financial instruments (continued)

Trustees regard risk as the likelihood that the Trust fails to achieve these objectives and have adopted a series of strategies to mitigate all risks. The principle strategies include:

  • ensuring the Fund is well diversified;
  • maintaining an appropriate level of liquidity;
  • avoiding purely speculative investments;
  • retaining an investment consultant for investment advice;
  • using only fund managers which are researched and recommended by the investment consultant;
  • maintaining adequate reserves;
  • regularly reviewing investment performance.

1. Credit Risk

Credit risk represents the risk that a counter-party to a financial asset fails to discharge an obligation which will cause the Trust to incur a financial loss. The current exposure at balance date is the fair value of these assets as disclosed in the Statement of Financial Position. Concentrations of risk arise when a number of financial instruments or contracts are entered into with the same counter-party or where a number of counter-parties are engaged in similar business activities, geographic regions or similar economic features that would influence their ability to meet their contractual obligations by reason of changes in economic, political or other considerations.

The Trust manages credit concentration risks through:

  • a diversified and non-correlated basket of investments across traditional and alternative asset classes
  • ensuring compliance with the mandate requirements of each fund manager

The credit quality of the Trust’s New Zealand and global fixed interest portfolios is managed using the Standard and Poors rating categories. In addition, exposure to global bonds is fully hedged against foreign currency movements. The following is an analysis of the Trust’s fixed interest portfolios, based on information supplied by the Fixed Interest managers.

Analysis of Fixed Interest Portfolios

Credit Rating 2009 Global 2009 NZ 2008 Global 2008 NZ
AAA 43,483 28,419 35,845 25,910
AA 10,704 11,677 19,634 10,253
A 8,028 4,379 5,965 4,931
BBB 3,345 581 5,491 -
Other 1,338 - 698 -
Totals 66,898 45,056 67,633 41,094
Sector Rating 2009 Global 2009 NZ 2008 Global 2008 NZ
Government 37,463 26,063 31,328 21,274
Corporates 22,745 17,547 17,503 13,060
Mortgages 11,373 - 17,050 -
Swaps (16,055) 377 (3,179) -
Other 11,372 1,069 4,931 6,760
Totals 66,898 45,056 67,633 41,094


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Online Sources for this page:

Gazette.govt.nz — PDF NZ Gazette 2009, No 116




✨ LLM interpretation of page content

💰 Notes to the Financial Statements (continued from previous page)

💰 Finance & Revenue
Financial statements, Financial instruments, Assets, Liabilities, Investment risks