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CapitaLand Mall Trust
Annual Report 2015
26 Classification and fair value of financial instruments
(continued)
Measurement of fair values
Financial instruments measured at fair value
Derivatives
The fair values of cross currency swaps (Level 2 fair values) are based on banks’ quotes. These quotes are
tested 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.
Financial instruments 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. Fair value 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 interest-bearing 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:
2015
%
2014
%
Interest-bearing borrowings
1.04 – 3.98 1.04 – 3.38
Financial instruments for which fair value is equal to 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.
Notes to the Financial Statements
Year ended 31 December 2015
