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Tenaga Nasional Berhad 302 Annual Report 2009Notes to the financial statements (Cont’d.)31 August 200943 FINANCIAL RISK MANAGEMENT (CONT’D.)(e)Fair value (Cont’d.)(i)On balance sheet (Cont’d.)Financial liabilities (Cont’d.)• borrowings other than bank overdraft – future contractual cash flows discounted at current market interest rates available for similarfinancial instruments• financial guarantees given to third parties – quotation from bankers in respect of the amount required to settle the contingentobligations at the balance sheet date• forward foreign exchange contracts – difference between the spot exchange rates and the contracted forward exchange rates at balancesheet date, applied to the contracted sum• interest rate swaps – present value of estimated future cash flows calculated using forward rates(ii)Off balance sheetThe financial derivative instruments are used to hedge foreign exchange and interest rate risks associated with certain long term foreign currencyborrowings. The contract notional principal amounts of the derivative and the corresponding fair value adjustments are analysed as below.Fair values of financial derivative instruments are the present values of their future cash flows and are arrived at based on valuations carriedout by the Company’s bankers. Favourable fair value indicates amount receivable by the Company if the contracts are terminated as at31 August 2009 or vice versa.contract ornotionalprincipal Favourable Unfavourableamount net fair value net fair valuerM’million RM’million RM’millionGroup2009Interest rate swaps 1,251.8 0 (59.3)Cross currency interest rate swap 34.1 6.8 0Currency option 976.0 21.2 0Corporate guarantee given to financial institutionsin respect of facilities granted to subsidiaries 0 0 02,261.9 28.0 (59.3)2008Interest rate swaps 0 0 0Cross currency interest rate swap 103.1 0 (0.4)Currency option 812.5 0 (0.9)Corporate guarantee given to financial institutionsin respect of facilities granted to subsidiaries 0 0 0915.6 0 (1.3)