IBERSOL | Annual Report 2021

The Ibersol Group Exchange rate risks The Ibersol Group follows a policy of natural coverage in this issue, resorting to funding in local currency. Since it is mostly present in the Iberian market, bank loans are generally in euros and the purchase volume outside of the Eurozone does not take on relevant propor- tions. The main source of exposure comes from investment outside of the Eurozone, related to operations in Angola, which are small and of decreasing importance in the Group’s activity. Economic imbalances in Angola have led to a scarcity of foreign currency in the country, which makes the devaluation of the Kwanza a risk to consider. Loans contracted by Angolan branches are expressed in local cur- rency, the same in which income is generated. Considering current limits on foreign payments, the Group adopted a policy of monthly monitoring of credit balances in foreign currency and their full cov- erage with the acquisition of Treasury Bonds from the Republic of Angola, which are pegged to the USD. Interest rate risks With the exception of Angolan State Treasury Bonds, the Ibersol Group does not have remunerated assets with significant interest. Therefore, investment activity profits and cashflow are substantially independent from fluctuations of market interest rates. Regarding the Angolan State Treasury Bonds, pegged to the American Dollar, interest rates are fixed, so there is no risk there either. The main interest rate risk for the Ibersol Group is in its liabilities, namely long-term loans. Loans issued with variable rates expose the Group to cashflow risks associated to the interest rate. Loans issued with fixed rates expose the Group to the fair value risk associated to the interest rate. With the current interest rate level, the Group’s policy is, for higher maturity loans, to fix interest rates up to 30% of the debt. 70