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Obligation of liquidity for repayments
(x 1,000 EUR)
2015
2014
Between one and two years
104,872
300,976
Between two and five years
491,609
711,371
Beyond five years
216,267
142,540
TOTAL
812,748 1,154,887
Non-current undrawn borrowing facilities
(x 1,000 EUR)
2015
2014
Expiring within one year
136,500
20,000
Expiring after one year
1,149,000
597,700
Collateralisation
The book value of the pledged financial assets stands at
39,792,864 EUR at 31.12.2015 (2014: 39,439,728 EUR). The terms and
conditions of the pledged financial assets are detailed in Note 41.
During 2015, there were no payment defaults on loan agreements or
violations of the terms of these agreements.
C. HEDGING DERIVATIVE FINANCIAL INSTRUMENTS
The Group uses derivative financial instruments (Interest Rate Swaps,
purchase of CAP options, sale of FLOOR options) to hedge its exposure
to interest rate risks arising from its operational, financing and invest-
ment activity.
Type of hedging derivative financial instruments
CAP
A CAP is an interest rate option. The buyer of a CAP is paying for the
right to borrow at a maximum interest rate for a specific period. The
buyer only exercises this right if the actual short-term rate exceeds
the CAP’s maximum interest rate. In order to buy a CAP, the buyer pays
a premium to the counterparty. By buying a CAP, Cofinimmo obtains a
guaranteed maximum rate. The CAP therefore hedges against unfa-
vourable rate increases.
FLOOR
The seller of a FLOOR sells the right to benefit from a minimum interest
rate during a specific period and will thus have to pay this rate to the
buyer, even if it is higher than the market rate. By selling a FLOOR, the
seller receives a premium from the buyer. Through the combination
of the purchase of a CAP and the sale of a FLOOR, Cofinimmo ensures
itself of an interest rate that is fixed in a corridor (interest rate collar)
between a minimum rate (the rate of the FLOOR) and a maximum rate
(the rate of the CAP), while limiting the cost of the premium paid for
this insurance.
Interest Rate Swap (IRS)
An Interest Rate Swap (IRS) is an interest rate forward contract,
unlike a CAP or a FLOOR, which are interest rate options. With an IRS,
Cofinimmo exchanges a floating interest rate against a fixed interest
rate or vice versa.
The IRS contracts are detailed in the table on page 188.
Cancellable Interest Rate Swap
A Cancellable Interest Rate Swap is a classic IRS that also contains a
cancellation option for the bank as from a certain date. Cofinimmo has
contracted a Cancellable Interest Rate Swap to exchange a floating
interest rate against a fixed interest rate. The sale of this cancellation
option allowed to reduce the guaranteed fixed rate during the period
covering at least the first cancellation date. The Cancellable Interest
Rate Swaps are detailed in the table of page 188.
In accordance with its financial policy, the Group does not hold nor
issue derivative financial instruments for trading purposes. However,
derivatives that do not qualify for hedge accounting are accounted for
as trading instruments.
Floating-rate borrowings at 31.12.2015 hedged by derivative financial
instruments
The floating-rate debt (560 million EUR) is obtained by deducting
from the total debt (1,255 million EUR) the elements of the debt that
remained at fixed rate after taking into account the Interest Rate
Swaps, as detailed in the table below:
(x 1,000 EUR)
2015
2014
Financial debts
1,254,989
1,621,522
Convertible bonds
-387,550
-381,391
Bonds - fixed rate
-280,000
-90,000
Mandatory convertible bonds (minimum fixed coupon)
-3,846
-4,063
Fixed-rate borrowings
-9,720
-10,183
Other (accounts receivable, rental guarantees received)
-13,454
-16,685
Floating-rate borrowings hedged by derivative financial instruments
560,419
1,119,200
187