CapitaLand Integrated Commercial Trust - Annual Report 2021

Notes to the Financial Statements YEAR ENDED 31 DECEMBER 2021 30 CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS (continued) Measurement of fair values Financial instruments that are measured at fair value Financial derivatives The fair values of cross currency swaps and interest rate swaps (Level 2 fair values) are based on banks’ quotes. These quotes are assessed for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take into account the credit risk of the Group and counterparties when appropriate. The fair values of forward exchange contracts are determined using quoted forward exchange rates at the reporting date and present value calculations based on high credit quality yield curve in the respective currencies. Financial instruments that are not measured at fair value Other non-derivative financial liabilities are measured at fair value at initial recognition and for disclosure purposes, at each annual reporting date. The fair value of quoted loans and borrowings is their quoted ask price at the reporting date. Fair value for unquoted loans and borrowings is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the measurement date. Other non-derivative financial liabilities include loans and borrowings. Interest rates used in determining fair values The interest rates used to discount estimated cash flows, where applicable, are based on forward rates as at 31 December plus a credit spread, and are as follows: 2021 2020 % % Loans and borrowings 0.48 – 3.33 0.84 – 2.16 Financial instruments for which fair value approximates the carrying value These financial instruments include loans to subsidiaries and joint ventures, trade and other receivables, cash and cash equivalents, trade and other payables and security deposits. The carrying amounts of these financial instruments are an approximation of their fair values because they are either short term in nature, effect of discounting is immaterial or reprice frequently. CapitaLand Integrated Commercial Trust 308