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96 IHG Annual Report and Financial Statements 2010
Notes to the Group financial statements continued
22. Loans and other borrowings continued
£250m 6% bonds
The 6% fixed interest sterling bonds were issued on 9 December 2009 and are repayable in full on 9 December 2016. Interest is payable
annually on 9 December in each year commencing 9 December 2010 to the maturity date. The bonds were initially priced at 99.465% of
face value and are unsecured. Currency swaps were transacted at the same time the bonds were issued in order to swap the proceeds
and interest flows into US dollars (see note 23 for further details).
Unsecured bank loans
Unsecured bank loans are borrowings under the Group’s Syndicated Facility and its short-term bilateral loan and overdraft facilities.
Amounts are classified as non-current when the facilities have more than 12 months to expiry. These facilities contain financial covenants
and, as at the end of the reporting period, the Group was not in breach of these covenants, nor had any breaches or defaults occurred
during the year. At 1 January 2009, the Group had access to a $0.5bn term loan with a 30-month maturity and a $1.6bn five-year revolving
credit facility. In December 2009, $415m of the term loan was repaid with proceeds from the bond issue and the remaining $85m was
repaid in September 2010. The $1.6bn revolving credit facility matures in May 2013.
2010 2009
Utilised Unutilised Total Utilised Unutilised Total
Facilities provided by banks $m $m $m $m $m $m
Committed 205 1,400 1,605 519 1,174 1,693
Uncommitted 1 52 53 3 22 25
206 1,452 1,658 522 1,196 1,718
2010 2009
$m $m
Unutilised facilities expire:
Within one year 52 22
After two but before five years 1,400 1,174
1,452 1,196
Utilised facilities are calculated based on actual drawings and may not agree to the carrying value of loans held at amortised cost.
23. Derivative financial instruments
2010 2009
restated*
$m $m
Currency swaps 38 13
Interest rate swaps 4 7
Forward foreign exchange contracts 2 –
44 20
Analysed as:
Current liabilities 6 7
Non-current liabilities 38 13
44 20
* Restated for a $13m reclassification from current liabilities to non-current liabilities.
Derivatives are recorded at their fair values, estimated using discounted future cash flows taking into consideration interest and exchange
rates prevailing on the last day of the reporting period.
Currency swaps
At 31 December 2010, the Group held currency swaps with a principal of $415m (2009 $415m). These swaps were transacted at the same
time as the £250m 6% bonds were issued in December 2009 in order to swap the bonds’ proceeds and interest flows into US dollars. Under
the terms of the swaps, $415m was borrowed and £250m deposited for seven years at a fixed exchange rate of 1.66. The fair value of the
currency swap comprises two components: $27m (2009 $10m) relating to the repayment of the underlying principal and $11m (2009 $3m)
relating to interest payments. The element relating to the underlying principal is disclosed as a component of net debt (see note 24).
The currency swaps are designated as net investment hedges.