YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2024 300 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 January 2024 41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) (a) Market risk (continued) (i) Interest rate risk (continued) To hedge the variability in cash flows of its USD SOFR and USD LIBOR borrowings, the Group entered into interest rate swaps with key terms (principal amount, payment dates, repricing dates, currency) that match those of the debt on which it pays a fixed rate and receives a variable rate. As at reporting date, the Group’s negotiated contracts for which SOFR replaced LIBOR as the benchmark rate resulted in an economically equivalent position with no profit or loss impact upon initial transition. There were no outstanding contracts in transition to SOFR as at reporting date. Instruments used by the Group As at 31 January 2024, the swaps currently in place covered approximately 90% (2023: 88%) of the Group’s outstanding 3-month USD SOFR variable rate project financing loans and approximately 70% (2023: 77%) of the carrying amount of the USD SOFR and USD LIBOR borrowings. These loans bear variable rates based on USD SOFR plus a certain margin, however the interest rates are fixed based on the fixed interest rates of the swaps which range between 3.72% to 6.39% (2023: 3.89% to 6.39%). The swap contracts require settlement of net interest receivable or payable every quarter. The settlement dates coincide with the dates on which interest is payable on the underlying debt. Effects of hedge accounting on the financial position and performance The effects of the above-mentioned interest rate swaps on the Group’s financial position and performance are as follows: 2024 SOFR RM million Interest rate swaps Carrying amount (current and non-current asset and non-current liability) 356 Notional amount 7,952 Hedge ratio of project financing loans 90% Change in fair value of outstanding hedging instruments since 1 February (21) Change in value of hedged item used to determine hedge effectiveness (21) Weighted average hedged rate for the year 3.72% to 6.39%
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