Note 40 Other financial assets
Other financial assets
In June 2015, Alliander granted a long-term loan of €2,566 million to Liander, along with other lending. This amount has been deducted from the current account. This means that, with effect from June 2015, there have been two separate financing arrangements between Alliander and Liander, namely the new long-term loan agreement, essentially for the purpose of financing network replacement and expansion investments, as well as the existing, separate current account agreement to finance working capital. This provides a closer match between the time horizons of the financing arrangements and the usefull lives of the corresponding assets.
The long-term loan agreement with Liander runs for 10 years with automatic annual extension thereafter for periods of one year unless designated otherwise. The interest rate for 2015 is 4.1%, this being the average cost of borrowing on Alliander’s lending portfolio, plus a risk markup. The interest rate will be reviewed annually. The principal will be repayable at the latest on the conclusion of the arrangement. At year-end 2015 the fair value is €3,112 million.