✨ Financial Risk Analysis
NEW ZEALAND GAZETTE, No. 159
29 NOVEMBER 2010
TRANSPOWER NEW ZEALAND LIMITED LINES BUSINESS
Fair value movement risk
The Transpower Lines Business’s net debt is designated at fair value through profit or loss. As such, The Transpower Lines Business is subject to fair value gains or losses. The extent of the gains or losses is based on The Transpower Lines Business’s cash flow profile compared to the corresponding movement in the yield curve. For debt and investments the yield curve is effectively adjusted for the credit margin.
A parallel shift in the yield curve by 1% would create the following fair value movements based on net debt held at 30 June 2010:
- 1% parallel upward shift - fair value gain of $118.2 million (30 June 2009: $105.4 million)
- 1% parallel downward shift - fair value loss of $125.8 million (30 June 2009: $114.6 million)
Credit spread movement risk
The profit or loss impact of movements in the credit spread on the fair value was a $6 million loss in 2010 (2009: $70 million gain). The cumulative (balance sheet) impact was a $64 million gain in 2010 (2009: $70 million gain).
A 10 basis point increase (decrease) in credit spreads is estimated to result in a fair value gain (loss) of $11 million.
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NZ Gazette 2010, No 159
✨ LLM interpretation of page content
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Transpower New Zealand Limited Financial Statements
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🏭 Trade, Customs & IndustryFinancial Risks, Fair Value Movement, Credit Spread, Yield Curve, Net Debt, Fair Value Gains, Fair Value Losses, Credit Margin, Balance Sheet Impact