Aviva 2007 Annual Report Download - page 211
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Please find page 211 of the 2007 Aviva annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.47 – Borrowings continued
(d) Description and features
(i) Subordinated debt
A description of each of the subordinated notes is set out in the table below:
In the event the Company
does not call the notes,
Callable at par at the coupon will reset at
Notional amount Issue date Redemption date option of the Company from each applicable reset date to
£700 million 14 November 2001 14 November 2036 16 November 2026 5 year Benchmark Gilt + 2.85%
1800 million 14 November 2001 14 November 2021 14 November 2011 3 month Euribor + 2.12%
1650 million 29 September 2003 2 October 2023 2 October 2013 3 month Euribor + 2.08%
1500 million 29 September 2003 Undated 29 September 2015 3 month Euribor + 2.35%
£800 million 29 September 2003 Undated 29 September 2022 5 year Benchmark Gilt + 2.40%
US$300 million 19 December 2006 19 June 2017 19 June 2012 3 month US LIBOR + 0.84%
The subordinated notes were issued by the Company. They rank below its senior obligations and ahead of its preference
shares and ordinary share capital. The dated subordinated notes rank ahead of the undated subordinated notes. The fair
value of these notes at 31 December 2007 was £3,006 million (2006: £3,076 million), calculated with reference to
quoted prices.
(ii) Debenture loans
The 9.5% guaranteed bonds were issued by the Company at a discount of £1.1 million. This discount and the issue
expenses are being amortised over the full term of the bonds. Although these bonds were issued in sterling, the loans
have effectively been converted into euro liabilities through the use of financial instruments in a subsidiary.
The 2.5% perpetual subordinated loan notes were issued by a Dutch subsidiary to finance the acquisition of NUTS OHRA
Beheer BV in 1999. They are convertible into ordinary shares in Delta Lloyd NV, should there be a public offering of those
shares. These loan notes have a face value of 1489.9 million but, because they are considered to be perpetual, their
carrying value is 1172.4 million, calculated in 1999 and based on the future cash flows in perpetuity discounted back
at a market rate of interest. The rate of interest paid on the notes is being gradually increased to a maximum of 2.76%
in 2009.
The 5.95% Senior Notes had been issued by a United States subsidiary prior to acquisition by the Group. On 23 February
2007, the subsidiary exercised its option to redeem the notes early for an amount not significantly different to their
carrying value. As a result, these notes have been shown in table (b) for 2006 as maturing within one year.
Other loans comprise borrowings in the United States.
Fixed rate borrowings comprise £335 million (2006: £521 million) of the total carrying value of £335 million (2006:
£521 million). The fair value of debenture loans at 31 December 2007 was £395 million (2006: £580 million), calculated
with reference to quoted prices or discounted future cash flows as appropriate.
(iii) Commercial paper
The commercial paper consists of £918 million in the Company (2006: £733 million) and £4 million in France
(2006: £4 million). All of this is considered core structural funding.
All commercial paper is repayable within one year and is issued in a number of different currencies, primarily sterling,
euros and US dollars. Its fair value is considered to be the same as its carrying value.
(iv) Bank loans
Bank loans comprise:
2007 2006
£m £m
Non-recourse
Loans to property partnerships (see (a) below) 485 123
Loans to Irish investment funds (see (b) below) 74 –
RBS securitisation arrangement (see (c) below) –199
Other non-recourse loans 16 15
575 337
Mortgages sold to building societies (see (d) below) –257
Banking loans 103 109
Other loans 386 171
1,064 874
Aviva plc
Annual Report and
Accounts 2007
207
Financial
statements