Telstra 2012 Annual Report Download - page 161
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Telstra Corporation Limited and controlled entities
131
Notes to the Financial Statements (continued)
(a) Risk and mitigation (continued)
Market risk (continued)
(i) Interest rate risk (continued)
We hedge interest rate and currency risk on most of our foreign
currency borrowings by entering into cross currency principal swaps
and interest rate swaps when required, which have the economic
effect of converting foreign currency borrowings to Australian dollar
borrowings. ‘Hedging strategies’ and ‘Hedge relationships’
contained in sections (b) and (c) of this note provides further
information.
The weighted average interest rates on our fixed and floating rate
financial instruments as at 30 June, which do not have offsetting risk
positions, and the principal/notional amounts on which interest is
calculated, are shown in Table A below. Interest rate positions on
our foreign cross currency and foreign interest rate swaps and on
the majority of our foreign borrowings are fully offset. Accordingly,
the majority of our instruments in the following table represent
Australian dollar interest positions. Principal/notional amounts
shown are net of discounts and as such differ from the face value
disclosed in note 17 (Tables C and D).
18. Financial risk management (continued)