Notes to the financial statements
23. Financial risk management continued 23.3 Liquidity risk continued Policies
Vector is exposed to liquidity risk where there is a risk that the group may encounter difficulty in meeting its day to day obligations due to the timing of cash receipts and payments. The objective is to ensure that adequate liquid assets and funding sources are available at all times to meet both short-term and long-term commitments. The board has set a minimum headroom requirement for committed facilities over Vector’s anticipated 18-month peak borrowing requirement. At balance date, Vector has access to undrawn funds of $575.0 million (2022: $644.0 million).
23.4 Foreign exchange risk Policies
Vector is exposed to foreign exchange risk through its borrowing activities, and foreign currency denominated expenditure. Foreign exchange exposure is primarily managed through entering into derivative contracts. The board requires that all significant foreign currency borrowings and expenditure are hedged into NZD at the time of commitment to drawdown or when the exposure is highly probable. Hence, at balance date there is no significant exposure to foreign currency risk.
23.5 Funding risk Policies
Funding risk is the risk that Vector will have difficulty refinancing or raising new debt on comparable terms to existing facilities. The objective is to spread the concentration of risk so that if an event occurs the overall cost of funding is not unnecessarily increased. Details of borrowings are shown in note 21. The board has set the maximum amount of debt that may mature in any one financial year.
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