6. Categories of financial assets and liabilities

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6. Categories of financial assets and liabilities

The carrying amounts of financial assets and liabilities in each of the categories of financial instruments are as follows:

	Group	Group	Parent	Parent
	2008 ($m)	2007 ($m)	2008 ($m)	2007 ($m)
Financial assets
Loans and receivables
Debtors and other receivables	26	41	45	154
Overnight investments	14	14	0	0
Mortgages	96	75	96	75
Total loans and receivables	136	130	141	229
Financial assets available for sale at fair value through equity
Bank registered certificates of deposit	70	0	70	0
Bank registered certificates of deposit - provisions	23	24	23	24
Total financial assets available for sale at fair value through equity	93	24	93	24
Derivatives assets at fair value through income statement
Interest rate swaps - not hedged accounted	0	1	0	0
Total derivatives assets at fair value through income statement	0	1	0	0
Derivatives assets at fair value through equity
Interest rate swaps - cashflow hedges	34	63	2	4
Total derivates assets at fair value through equity	34	63	2	4
Financial liabilities
Derivatives liabilities at fair value through income statement
Interest rate swaps - not hedged accounted	0	4	0	0
Total derivatives liabilities at fair value through income statement	0	4	0	0
Derivatives liabilities at fair value through equity
Interest rate swaps - cashflow hedges	3	0	0	0
Total derivates liabilities at fair value through equity	3	0	0	0
Financial liabilities at fair value through income statement
Crown loans - fixed interest rate	50	50	0	0
Domestic bonds	0	100	0	0
Euro medium term notes	0	28	0	0
Total financial liabilities at fair value through income statement	50	178	0	0
Financial liabilities measured at amortised cost
Crown loans - floating interest rate	1,745	1,592	303	296
Commercial paper	0	30	0	0
Creditors and other payables	129	139	24	22
Financial guarantees - sold loans	10	12	10	12
Total financial liabilities measured at amortised cost	1,884	1,773	337	330

Cash and cash equivalents

	Group	Group	Parent	Parent
	2008 ($m)	2007 ($m)	2008 ($m)	2007 ($m)
Overnight investments	14	14	0	0
Bank registered certificates of deposit	70	0	70	0
6(a) Total cash and cash equivalents	84	14	70	0

Cash at bank earns interest at floating rates based on daily bank deposit rates. The weighted average effective interest rate for overnight money market investments is 8.25% (2007, 8%).

The weighted average interest rate on registered certificates of deposit is 8.66% (2007, nil).

Bank registered certificates of deposit are for varying periods of up to six months depending on the immediate cash requirements of the Group.

Fair values

All categories of financial assets and liabilities have been carried at fair value in the balance sheet with the exception of the following:

the fair value of derivative items has been calculated by discounting the expected future cash flows at
prevailing interest rates
the carrying value of guarantees appoximates fair value.

	Carrying amount	Carrying amount	Fair value	Fair value
	2008 ($m)	2007 ($m)	2008 ($m)	2007 ($m)
GROUP
Financial assets
Loans and receivables
Debtors and other receivables	26	41	26	41
Overnight money market investments	14	14	14	14
Mortgages	96	75	57	58
Total loans and receivables	136	130	97	113
Financial liabilities
Financial liabilities measured at amortised cost
Crown loans - floating interest rate	1,745	1,592	1,745	1,592
Commercial paper	0	30	0	30
Creditors and other payables	129	139	129	139
Financial guarantees - sold loans	10	12	10	12
Total financial liabilities measured at amortised cost	1,884	1,773	1,884	1,773

	Carrying amount	Carrying amount	Fair value	Fair value
	2008 ($m)	2007 ($m)	2008 ($m)	2007 ($m)
PARENT
Financial assets
Loans and receivables
Debtors and other receivables	45	154	45	154
Mortgages	96	75	57	58
Total loans and receivables	141	229	102	212
Financial liabilities
Financial liabilities measured at amortised cost
Crown loans - floating interest rate	303	296	303	296
Creditors and other payables	24	22	24	22
Financial guarantees - sold loans	10	12	10	12
Total financial liabilities measured at amortised cost	337	330	337	330

Interest bearing borrowings - current and non-current

Set out below is the interest-bearing borrowings analysed by current and non-current.

	Group	Group	Parent	Parent
	Carrying amount 2008 ($m)	Carrying amount 2007 ($m)	Fair value 2008 ($m)	Fair value 2007 ($m)
Current
Commercial paper	0	30	0	0
Domestic bonds	0	100	0	0
Euro medium term notes	0	28	0	0
Crown loans - fixed interest rate	50	0	0	0
Crown loans - floating interest rate	121	90	21	40
6(b) Total current	171	248	21	40
Non-current
Crown loans - fixed interest rate	0	50	0	0
Crown loans - floating interest rate	1,624	1,502	282	256
6(c) Total non-current	1,624	1,552	282	256
Total current and non-current	1,795	1,800	303	296

Domestic Bonds

The Group had $100 million of domestic bonds that matured on 15 November 2007, with a coupon rate of 8% (2007, 8%). Bonds were issued under a Trust Deed dated 4 April 1996 between Housing New Zealand Limited and the New Zealand Guardian Trust Company Limited. Following the repayment of all the remaining domestic bonds in November 2007, a Deed of Release from the Trust Deed was executed with the
New Zealand Guardian Trust Company Limited dated 20 March 2008.

Euro medium term notes

The Group previously issued, under the Euro medium term note programme, a series of Euro medium term notes that have now been repaid. The notes were issued under a Trust Deed dated 6 December 2000 between Housing New Zealand Limited and Citicorp. Their face value in 2007 was NZ$31 million, fair value NZ$28 million, and had a weighted average interest rate of 5.93%. Following the repayment of Euro medium term notes on 10 July 2007 and 2 October 2007, a Deed of Release from the Trust Deed was executed with Citicorp dated 12 February 2008.

Interest-bearing borrowings

Commercial paper

The Group has a Note Issuance Facility Agreement dated 23 December 1998. At 30 June 2008 there was no commercial paper outstanding (2007, NZ$30 million). The commercial paper had a weighted average interest rate of 8.13% in 2007. The aggregate principal amount of commercial paper outstanding will not at any time exceed NZ$150 million. The Group has given a negative pledge that, while any commercial paper issued under the Note Issuance Facility remains outstanding, it will not, subject to certain exceptions, create or permit to exist any charge or lien over any of its assets.

Crown funding

The Group has refinanced its private sector term debt with Crown borrowings as the debt matures. As at 30 June 2008 $1,795 million (2007, $1,642 million) for the Group, and $303 million (2007, $296 million) for the Parent, has been borrowed from the Crown, with maturity dates ranging from 2008 to 2018.

The Group has given a negative pledge that, while any Crown borrowing remains outstanding, it will not, subject to certain exceptions, create or permit to exist any charge or lien over any of its respective assets. During the year ended 30 June 2008, $0 million (2007, $0.3 million) was approved by the Crown as a reduction in the debt to offset write-downs of home suspensory loans during the year.

	Group	Group	Parent	Parent
	2008 ($m)	2007 ($m)	2008 ($m)	2007 ($m)
Committed financing facilities available
At 30 June, the following committed financing facilities had been negotiated and were available:
Total facilities
Bank overdraft	1	1	1	1
Bank standby loan facility	50	50	0	0
	51	51	1	1
Facilities used at 30 June
Bank overdraft	0	0	0	0
Bank loans	0	0	0	0
	0	0	0	0
Facilities unused at 30 June
Bank overdraft	1	1	1	1
Bank loans	50	50	0	0
	51	51	1	1

Interest rate derivatives - current and non-current

Set out below are the interest rate derivatives analysed by current and non-current.

	Group	Group	Parent	Parent
	2008 ($m)	2007 ($m)	2008 ($m)	2007 ($m)
Interest rate derivatives - total assets
6(d) Interest rate derivatives - current assets	1	1	0	0
6(e) Interest rate derivatives - non-current assets	33	63	2	4
Interest rate derivatives - total assets	34	64	2	4
Interest rate derivatives - total liabilities
6(f) Interest rate derivatives - current liabilities	0	0	0	0
6(g) Interest rate derivatives - non-current liabilities	3	4	2	0
Interest rate derivatives - total liabilities	3	4	2	0

Financial assets and liabilities

Interest rate risk

The following table sets out the carrying amount, by maturity, of the financial assets and liabilities that are exposed to interest rate risk:

Interest rate risk table continued:

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Hedging activities

At 30 June 2008, the Group had no foreign exchange contracts or foreign currency debt.

Cash flow hedges

At 30 June 2008, the Group had 126 (2007, 116) interest rate swap agreements, with a notional amount of NZ$1,555 million (2007, NZ$1,418 million) and a weighted average fixed rate of interest of 7.06% (2007, 6.99%) and receives a variable rate equal to the 90 Day Bank Bill Rate. These interest rate swaps are being used to hedge the exposure to changes in the floating rate of its Crown borrowings and have been designated as hedging instruments.