Nokia 2010 Annual Report Download - page 269

35. Risk Management (Continued)
Fixed income and moneymarket investments
1, 2, 3
EUR million
,0
1,000
2,000
3,000
4,000
5,000
6,000
2009 2010 2009 2010 2009 2010 2009 2010
Banks Corporates Governments ABS
Ba1B3
Baa1Baa3
A1A3
Aa1Aa3
Aaa
(1)
Fixed income and moneymarket investments include term deposits, investments in liquidity funds and investments in fixed
income instruments classified as availableforsale investments and investments at fair value through profit and loss.
Liquidity funds invested solely in government securities are included under Governments. Other liquidity funds are included
under Banks.
(2)
Included within fixed income and moneymarket investments is EUR 37 million of restricted investment at December 31,
2010 (EUR 48 million at December 31, 2009). They are restricted financial assets under various contractual or legal
obligations.
(3)
Bank parent company ratings used here for bank groups. In some emerging markets countries, actual bank subsidiary
ratings may differ from parent company rating.
89% of Nokia’s cash is held with banks of investment grade credit rating (84% for 2009).
(c) Liquidity Risk
Liquidity risk is defined as financial distress or extraordinary high financing costs arising due to a
shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and
require financing. Transactional liquidity risk is defined as the risk of executing a financial transaction
below fair market value, or not being able to execute the transaction at all, within a specific period of
time.
The objective of liquidity risk management is to maintain sufficient liquidity, and to ensure that it is
available fast enough without endangering its value, in order to avoid uncertainty related to financial
distress at all times.
Nokia guarantees a sufficient liquidity at all times by efficient cash management and by investing in
liquid interest bearing securities. The transactional liquidity risk is minimized by only entering
transactions where proper twoway quotes can be obtained from the market.
Due to the dynamic nature of the underlying business, Nokia and Nokia Siemens Networks aim at
maintaining flexibility in funding by keeping committed and uncommitted credit lines available.
Nokia and Nokia Siemens Networks manage their respective credit facilities independently and
facilities do not include crossdefault clauses between Nokia and Nokia Siemens Networks or any
forms of guarantees from either party. At December 31, 2010, the committed facilities totaled EUR 3
508 million (EUR 4 113 million in 2009).
F81
Notes to the Consolidated Financial Statements (Continued)