Foreign Exchange and Interest Rate Risk Report of British Gas Group

Executive Summary

• Identification of major foreign exchange and interest rate risk affecting BG Group reveals that the Group is exposed to translation and transaction risk to the US dollar. Economic risk on the US dollar also poses a threat to the company. Interest rate risk is containable.
• BG Group utilises forward contracts, interest rate swaps, cross-currency interest rate swaps, forward rate agreements and currency swaps. Internal hedging methods include matching receivables and payable, centralised treasury function and switching of currency base.
• Transaction and economic risk are identified as major threats to the Group. Interest rate risk should not be hedge due to currency economic landscape. Only big single transaction items are to be hedged.
• Financial and non-financial information to be included in the ratings book to acquire good credit ratings from independent credit rating agencies

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Foreign Exchange and Interest Rate Risk Report of BG Group