CapitaLand Integrated Commercial Trust - Annual Report 2021

Notes to the Financial Statements YEAR ENDED 31 DECEMBER 2021 29 FINANCIAL RISK MANAGEMENT (continued) Managing interest rate benchmark reform and associated risks (continued) Total amounts of unreformed contracts, including those with an appropriate fallback clause (continued) The Group’s exposure to JPY LIBOR designated in hedging relationships is $200,000,000 (2020: $337,000,000) notional amount as at 31 December 2021, representing both the notional amount of the hedging cross currency swap and the principal amount of Group’s hedged JPY denominated unsecured floating rate MTN notes maturing in 2023 (2020: 2021 to 2023). The Group has amended all its JPY LIBOR indexed cross currency swaps to reference to the TONA effective from February 2022. Exposure to interest rate risk The Group’s exposure to changes in interest rates relates primarily to interest-bearing financial liabilities. Interest rate risk is managed on an ongoing basis with the primary objective of limiting the extent to which net interest expense could be affected by adverse movements in interest rates. The Group manages its interest rate exposure through the use of interest rate swaps, cross currency swaps and fixed rate borrowings. At the reporting date, the interest rate profile of the interest-bearing financial instruments, as reported to the management, was as follows: Group Trust Nominal amount Nominal amount 2021 2020 2021 2020 $’000 $’000 $’000 $’000 Fixed rate instruments Loans to subsidiaries – – 2,511,627 1,774,742 Loans to joint ventures 176,980 169,450 150,359 146,950 Loans and borrowings (5,809,083) (5,868,150) (3,526,287) (3,353,287) Loans from non-controlling interest (423) (439) – – Effect of interest rate swaps and cross currency swaps (1,412,872) (1,626,253) (735,000) (180,000) (7,045,398) (7,325,392) (1,599,301) (1,611,595) Variable rate instruments Loans and borrowings (2,383,798) (2,872,935) (1,385,226) (1,202,947) Effect of interest rate swaps and cross currency swaps 1,412,872 1,626,253 735,000 180,000 (970,926) (1,246,682) (650,226) (1,022,947) Fair value sensitivity analysis for fixed rate instruments The Group does not account for any fixed rate instruments at fair value through profit or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, in respect of the fixed rate instruments, a change in interest rates at the reporting date would not affect the Statement of Total Return. CapitaLand Integrated Commercial Trust 290