Water for the North West
Risk reduction - Interest rate hedging policy
Aims to minimise regulatory risk
•
AMP7 cost of debt set through PR19 process
We target around half of our debt to be in index-linked
form, and we keep index-linked debt un-swapped as a
good match for the RCV, which is 50% RPI-linked and 50%
CPIH-linked as at 1 April 2020 with post-2020 new
additions linked to CPIH
We fix underlying rates on the remaining nominal floating
rate debt on a 10-year reducing balance basis
This helps to manage uncertainty regarding Ofwat's
approach to setting the cost of debt at future price reviews
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
10-year rolling interest rate profile
Lock in rolling 10-year average
interest rate on nominal debt
Illustrative net debt fix/float/IL mix - prior to AMP6 additional hedging
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Floating Index linked
Fixed
Investor presentation
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