Aras,The company doesn't make much disclosure on who the hedges...

Aras,

The company doesn't make much disclosure on who the hedges are with so it's difficult to tell who the counterparty is. There are a number of lenders to CNP, most of whom are big names, so there is going to have to be overlap there. In the good-old-days, if a bank was in there flogging lending to Centro, I imagine they did everything to try and cross sell other financial instruments along the way. I guess we just don't know.

It would work in Centro's favour to have the lending banks as counterparties on the derivatives as this will reduce complexity in the current situation.

The underlying loan and the hedge are two separate things and again, Centro doesn't exactly bombard us with details on this. Going back to the half year results, p 30 and 31 of the presentation show the debt maturity profile and the interest rate hedging profile which don't look to be aligned. If you can work this out, I'd be interested.

In answer to your second question, I guess so. In theory at least they should be cash settling the difference every month anyway which means a cash flow to Centro in this case. We just don't know how much collateral Centro is being asked to put up. It also depends on the terms of the swap agreement. If you close out a position, this leaves you unhedged, which may be a risk that the company does not want to take. Centro may want to keep all of the hedging it can for the time being as I doubt they can open any new positions for a while.

Maybe at the AGM we can get some brave soul to ask for more details of the hedges. If the company says they will speak to the gardeners and get back to us, we know there is a problem.