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Financial assets and liabilities | 6 Months Ended
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Jun. 30, 2022
Financial Instruments [Abstract] |
Financial assets and liabilities |
Note 12 | Financial assets and liabilities
FAIR VALUE The following table provides the fair value details of financial instruments measured at amortized cost in the consolidated statements of financial position.
|  |  | JUNE 30, 2022 | DECEMBER 31, 2021
| CLASSIFICATION | FAIR VALUE METHODOLOGY | CARRYING VALUE | FAIR VALUE | CARRYING VALUE | FAIR VALUE
CRTC deferral account obligation | Trade payables and other liabilities and other non-current liabilities | Present value of estimated future cash flows discounted using observable market interest rates | 56 |  | 56 |  | 66 |  | 67 |
Debt securities and other debt | Debt due within one year and long-term debt | Quoted market price of debt | 23,734 |  | 22,072 |  | 23,729 |  | 26,354 |
The following table provides the fair value details of financial instruments measured at fair value in the consolidated statements of financial position.
|  |  | FAIR VALUE
| CLASSIFICATION | CARRYING VALUE OF ASSET (LIABILITY) | QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1) | OBSERVABLE MARKET DATA (LEVEL 2)(1) | NON-OBSERVABLE MARKET INPUTS (LEVEL 3)(2)
June 30, 2022 |  |  |  |  |
Publicly-traded and privately-held investments (3) | Other non-current assets | 175 |  | 14 |  | — |  | 161 |
Derivative financial instruments | Other current assets, trade payables and other liabilities, other non-current assets and liabilities | 365 |  | — |  | 365 |  | — |
Maple Leaf Sports & Entertainment Ltd. (MLSE) financial liability(4) | Trade payables and other liabilities | (149) |  | — |  | — |  | (149) |
Other | Other non-current assets and liabilities | 124 |  | — |  | 173 |  | (49) |
December 31, 2021 |  |  |  |  |
Publicly-traded and privately-held investments (3) | Other non-current assets | 183 |  | 24 |  | — |  | 159 |
Derivative financial instruments | Other current assets, trade payables and other liabilities, other non-current assets and liabilities | 279 |  | — |  | 279 |  | — |
MLSE financial liability(4) | Trade payables and other liabilities | (149) |  | — |  | — |  | (149) |
Other | Other non-current assets and liabilities | 122 |  | — |  | 185 |  | (63) |
(1)Observable market data such as equity prices, interest rates, swap rate curves and foreign currency exchange rates. (2)Non-observable market inputs such as discounted cash flows and earnings multiples. A reasonable change in our assumptions would not result in a significant increase (decrease) to our level 3 financial instruments. (3)Unrealized gains and losses are recorded in Other comprehensive income in the statements of comprehensive income and are reclassified from Accumulated other comprehensive income to Deficit in the statements of financial position when realized. (4)Represents BCE’s obligation to repurchase the BCE Master Trust Fund's (Master Trust Fund) 9% interest in MLSE at a price not less than an agreed minimum price should the Master Trust Fund exercise its put option. The obligation to repurchase is marked to market each reporting period and the gain or loss is recognized in Other (expense) income in the income statements. MARKET RISK CURRENCY EXPOSURES We use forward contracts, options and cross currency interest rate swaps to manage foreign currency risk related to anticipated purchases and certain foreign currency debt. In Q1 2022, we entered into cross currency interest rate swaps with a total notional amount of $750 million in U.S. dollars ($954 million in Canadian dollars) to hedge the U.S. currency exposure of our US-7 Notes maturing in 2052. See Note 10, Debt, for additional details. A 10% depreciation (appreciation) in the value of the Canadian dollar relative to the U.S. dollar would result in a loss of $13 million (loss of $21 million) recognized in net earnings at June 30, 2022 and a gain of $138 million (loss of $119 million) recognized in Other comprehensive income at June 30, 2022, with all other variables held constant. A 10% depreciation (appreciation) in the value of the Canadian dollar relative to the Philippine peso would result in a gain (loss) of $6 million recognized in Other comprehensive income at June 30, 2022, with all other variables held constant. The following table provides further details on our outstanding foreign currency forward contracts and options as at June 30, 2022.
TYPE OF HEDGE | BUY CURRENCY | AMOUNT TO RECEIVE | SELL CURRENCY | AMOUNT TO PAY | MATURITY | HEDGED ITEM
Cash flow | USD | 1,095 |  | CAD | 1,390 |  | 2022 | Commercial paper
Cash flow | USD | 291 |  | CAD | 370 |  | 2022 | Anticipated purchases
Cash flow | PHP | 1,174 |  | CAD | 28 |  | 2022 | Anticipated purchases
Cash flow | PHP | 2,147 |  | CAD | 50 |  | 2023 | Anticipated purchases
Cash flow | USD | 611 |  | CAD | 752 |  | 2023 | Anticipated purchases
Cash flow | USD | 254 |  | CAD | 317 |  | 2024 | Anticipated purchases
Cash flow - call options | USD | 100 |  | CAD | 129 |  | 2022 | Anticipated purchases
Cash flow - put options | USD | 100 |  | CAD | 127 |  | 2022 | Anticipated purchases
Economic | USD | 12 |  | CAD | 15 |  | 2022 | Anticipated purchases
Economic - put options | USD | 120 |  | CAD | 147 |  | 2022 | Anticipated purchases
Economic - call options | USD | 75 |  | CAD | 89 |  | 2022 | Anticipated purchases
Economic - call options | CAD | 95 |  | USD | 75 |  | 2022 |  | Anticipated purchases
Economic - options (1) | USD | 90 |  | CAD | 109 |  | 2022 |  | Anticipated purchases
Economic - options (1) | USD | 169 |  | CAD | 205 |  | 2023 |  | Anticipated purchases
Economic - call options | USD | 120 |  | CAD | 146 |  | 2024 |  | Anticipated purchases
(1) Foreign currency options with a leverage provision and a profit cap limitation. INTEREST RATE EXPOSURES In Q2 2022, we sold interest rate swaptions maturing in Q3 2022 with a notional amount of $750 million for $6 million. These interest rate swaptions hedge economically the fair value of our Series M-53 MTN debentures. The fair value of these interest rate swaptions at June 30, 2022 was a liability of $9 million recognized in Trade payables and other liabilities. In 2022, we entered into cross currency basis rate swaps maturing in 2023 with a notional amount of $540 million to hedge economically the basis rate exposure on future debt issuances. The fair value of these cross currency basis rate swaps at June 30, 2022 was a liability of $8 million recognized in Trade payables and other liabilities and Other non-current liabilities in the statements of financial position. We use leveraged interest rate options to hedge economically the dividend rate resets on $582 million of our preferred shares which had varying reset dates in 2021 for the periods ending in 2026. The fair value of these leveraged interest rate options at June 30, 2022 and December 31, 2021 was nil and a liability of $2 million, respectively, recognized in Trade payables and other liabilities and Other non-current liabilities in the statements of financial position. A gain of $1 million and $2 million for the three and six months ended June 30, 2022, respectively, relating to these leveraged interest rate options is recognized in Other (expense) income in the income statements. A 1% increase (decrease) in interest rates would result in a loss of $40 million and a (gain of $28 million) recognized in net earnings at June 30, 2022, with all other variables held constant. A 0.1% increase (decrease) in cross currency basis swap rates would result in a gain (loss) of $7 million recognized in net earnings at June 30, 2022, with all other variables held constant. EQUITY PRICE EXPOSURES We use equity forward contracts on BCE’s common shares to hedge economically the cash flow exposure related to the settlement of equity settled share-based compensation plans. The fair value of our equity forward contracts at June 30, 2022 and December 31, 2021 was a net asset of $16 million and $130 million, respectively, recognized in Other current assets, Trade payables and other liabilities, Other non-current assets and Other non-current liabilities in the statements of financial position. A loss of $81 million and $6 million for the three and six months ended June 30, 2022, respectively, relating to these equity forward contracts is recognized in Other (expense) income in the income statements. A 5% increase (decrease) in the market price of BCE’s common shares would result in a gain (loss) of $35 million recognized in net earnings at June 30, 2022, with all other variables held constant.

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