Page 169 - KELAG Annual Report 2019
P. 169

effectiveness. As a rule, it can be assumed that the change in value of the hedging instrument
           offsets all changes in value of future cash flows. As the overall risk of an increase in market interest
           rates in relation to the variable-interest rate financial liability is hedged, the hedge ratio stands at
           100%. Hedge ineffectiveness can only result from changes to the counterparty’s and KELAG’s
           credit risk.

           The nominal amount and interest rate of the hedging instrument and hedged item correspond to
           each other. The underlying variable market interest rate is the three-month EURIBOR. The future
           interest payments hedged by interest rate swaps will occur in the next two years (2020 to 2021)
           and have a corresponding effect on profit or loss.
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