Waikato River Authority Annual Report
2012
43
c) Interest rate risk
2011
Balance Maturity
Effective
date
interest rate
Term Deposit
21,087,611 24/07/11
4.35%
21,087,611
2012
Balance Maturity
Effective
date
interest rate
Term Deposit
1,600,000 27/10/12
4.65%
Term Deposit
2,554,508 02/09/12
4.66%
Term Deposit
19,235,117 06/09/12
4.75%
23,389,625
d) Sensitivity analysis
In managing interest rate the trust aims to reduce the impact of short-term
fluctuations on the trust’s earnings by investing in short term deposits. Over the
longer-term, however, permanent changes in interest rates will have an impact on
profit. A decrease in interest rates of one percent would reduce interest income
by $233,896.
e) Credit quality of financial assets
The credit quality of financial assets that are neither past due nor impaired can
be assessed by reference to Standard and Poor’s credit ratings (if available) or to
historical information about counterparty default rates.
2012
2011
COUNTERPARTIES WITH CREDIT RATINGS
Cash at bank and term deposits
AA-
28,418,426
27,107,452
28,418,426
27,107,452