Nokia 2007 Annual Report Download - page 214

35. Risk Management (Continued)
Fixed income and moneymarket investments
(1), (2)
EUR million
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2006 2007 2006 2007 2006 2007 2006 2007
Banks Corporates Governments ABS
Baa1-Baa3
P-1
A1-A3
Aa1-Aa3
Aaa
(1)
Fixed income and moneymarket investments include term deposits, investments in liquidity funds and investments in fixed
income instruments classified as Availableforsale. Availableforsale investments are carried at fair value in 2007 and 2006.
(2)
Included within fixed income and moneymarket investments is EUR 169 million of restricted investment at December 31, 2007
(EUR 10 million at December 31, 2006). They are restricted financial assets under various contractual or legal obligations.
73% of Nokia’s Bank and cash is held with banks of credit rating Aa2 or above (70% for 2006).
(c) Liquidity Risk
Liquidity risk is defined as financial distress or extraordinary high financing costs arising due to a
shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and require
financing. Transactional liquidity risk is defined as the risk of executing a financial transaction below
fair market value, or not being able to execute the transaction at all, within a specific period of time.
The objective of liquidity risk management is to maintain sufficient liquidity, and to ensure that it is
available fast enough without endangering its value, in order to avoid uncertainty related to financial
distress at all times.
Nokia guarantees a sufficient liquidity at all times by efficient cash management and by investing in
liquid interest bearing securities. The transactional liquidity risk is minimized by only entering
transactions where proper twoway quotes can be obtained from the market. Due to the dynamic
nature of the underlying business, Treasury also aims at maintaining flexibility in funding by keeping
committed and uncommitted credit lines available. At the end of December 31, 2007 the committed
facilities totaled EUR 3 270 million. The committed credit facilities are intended to be used primarily
for US and Euro Commercial Paper Programs back up purposes. The average commitment fee on the
facilities is 0.041% per annum.
The most significant existing funding programs include:
• Revolving Credit Facility of USD 2 000 million, maturing 2008
• Credit Facility of EUR 500 million, maturing 2011
• Revolving Credit Facility of USD 2 000 million, maturing in 2012
• Euro Medium Term Note (EMTN) program, totaling EUR 3 000 million
F71
Notes to the Consolidated Financial Statements (Continued)