MTM of derivatives was -$419m at the HY. Total group debt was $4,073m at the HY. Average debt maturity was 3.3 years at the HY.
Therefore, from 4073x3.3/419, we can calculate that an average movement of -3.12% in interest rates caused the loss on derivatives, using MTM methods. Of course, it depends on how much debt GMG has swapped, but I've assumed 100% for simplicity of calcs.
If interests rates were to fall further, then there would be further losses on the derivatives. The reverse would be true if rates were to increase.
If GMG had to refinance borrowings at a higher rate/margin, wouldn't the derivatives mitigate against this, and in fact cause a smaller MTM loss?
At the end of the day, as far as I can tell, GMG has to pay finance costs on the swap rate. The MTM losses/gains are just paper based, and luckily, are not linked to any covenants.
GMG Price at posting:
13.2¢ Sentiment: Hold Disclosure: Held
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