Financial Risk Management
The group's activities expose it to a variety of financial risks. The financial risk management function is carried out centrally under the policies approved by the Board. The group reviews operations actively to identify and monitor all financial risks and to mitigate these risks through the use of hedging instruments where appropriate. The Board is informed on a regular basis of any material exposures to financial risks.
The group uses derivative financial instruments in the normal course of business in accordance with the group's financial risk management policies. The group’s policies allow derivative transactions to be undertaken for the purpose of reducing risk and do not permit speculative trading.
In addition, the group is also exposed to interest rate risk arising from its long-term borrowings. The group manages interest rate risk by entering into fixed rate debt facilities or by using interest rate swaps to convert floating rate debt to fixed interest rates. The group’s policy is to hedge interest rate exposure at a minimum in compliance with the covenant requirements of funding facilities and up to 100%.
A key financial risk to the group is the fluctuation in foreign exchange rates. A summary of the group’s cross-currency swaps is provided below.
Cross-Currency Swaps Summary1
|Euro Bond 1||€225M||US$305M||Oct-2020|
|Euro Bond 1||€275M||A$399M||Oct-2020|
|Euro Bond 2||€600M||A$833M||Sep-2024|
|Euro Bond 3||€500M||A$706M||Aug-2025|
|Euro Bond 4||€500M||A$749M||Mar-2028|
|Euro Bond 5||€600M||A$968M||May-2029|
|Euro Bond 6||€350M||A$570M||Jul-2034|
|USPP 2005 C||US$157M||A$206M||Aug-2020|
|USPP 2006 D||US$67M||A$70M||Nov-2026|
|144A Series 1||US$50M||A$70M||Feb-2026|
|144A Series 2||US$550M||A$733M||Mar-2027|
|USPP 2015 A||US$155M||A$203M||Sep-2025|
|USPP 2015 B||US$230M||A$302M||Sep-2027|
|USPP 2015 C||US$256M||A$336M||Sep-2030|
|USPP 2016 E||US$130M||A$169M||Dec-2026|
|USPP 2016 F||US$225M||A$293M||Dec-2028|
|USPP 2016 G||US$78M||A$102M||Dec-2031|
|USPP 2019 K||US$144M||A$204M||May-2029|
|USPP 2019 L||US$245M||A$347M||May-2031|
|USPP 2019 M||US$180M||A$255M||May-2034|
|CHF Bond A||CHF200M||A$279M||Jun-2023|
|CHF Bond B||CHF175M||A$235M||Nov-2026|
|CHF Bond C||CHF200M||A$270M||Dec-2025|
1. Data as at 31 December 2019.