Draft Long Term Plan 2012-2022 - Hurunui District Council

www.hurunui.govt.nzTreasury Risk Management PolicyThe definition and recognition of interest rate, liquidity, funding,investment, counterparty credit, market, operational andlegal risk of Council will be as detailed below and applies toboth the Liability Management policy and Investment policy.Interest Rate RiskRisk RecognitionInterest rate risk is the risk that funding costs (due to adversemovements in market interest rates) will materially exceed orfall short of projections included in the LTCCP and Annual Planso as to adversely impact revenue projections, cost control andcapital investment decisions/returns/and feasibilities.The primary objective of interest rate risk management is toreduce uncertainty relating to interest rate movements throughfixing/hedging of funding costs.Approved Financial InstrumentsDealing in interest rate products must be limited to financialinstruments approved by the Council.CategoryCash managementandborrowingInvestmentsInterest rate riskmanagementInstrumentBank overdraftCommitted cash advance and bank accepted bill facilities(short term and long term loan facilities)Uncommitted money market facilitiesRetail and wholesale Bond and Floating Rate Note (FRN)issuanceCommercial paper (CP)Short term bank depositsBank certificates of deposit (RCDs)Treasury billsNZ Government, Local Authority bonds and FRNs(secured/senior)LGFA borrower notes / CP / bills / bonds/ FRNs (floatingrate notes)Local Authority promissory notes, Commercial paper(secured/senior)Forward rate agreements (“FRAs”) on:Bank billsGovernment bondsInterest rate swaps including:Forward start swaps (start date