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Derivative financial instruments | 12 Months Ended
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Dec. 31, 2019
Disclosure Of Financial Instruments [Abstract] |
Derivative financial instruments |
16. | Derivative financial instruments
The Company has borrowings denominated in US dollars and debt securities at variable interest rates in pesos, which in case of an increase in interest rates, would reduce the Company’s cash flows. Through the contracting of the CAP´s and SWAP´s with HSBC and Scotiabank, in some of these borrowings, the Company seeks to limit the risk of interest rate increases. In 2016 the Company contracted some hedges in which it has a floor and two collars to the increase in interest rates, so that if the relevant rate surpasses the level established (strike) in the contract, the CAP generates positive cash flows to the Company, which offsets the negative effects of the increase in the interest rates from the underlying loans. The Company’s derivative financial instruments are negotiated in the market Over The Counter (OTC), through national and international counter parties. The issuance of debt securities “GAP 15” in February 2015 for Ps. 1,100,000 and the second tranche of the same debt securities “GAP 15” in January 2016 for Ps. 1,100,000, generates interest at a variable rate of TIIE-28 plus 24 basis points with a term of 5 years. This credit has a hedge of the interest rate Collar category with floor of 4.05%, CAP 1 5.75% and a second CAP of 6.75%. During January and February 2016, the Company entered into unsecured credit agreement with Scotiabank and BBVA for USD$95.5 million with each institution, for a total of USD$191.0 million. The loans generate interest at Libor 1M plus 99 and 105 basis points, respectively, with monthly interest payments, for a term of 5 years. For this credit an interest rate hedge Collar category was contracted, with floor of 0.42%, CAP 1 1.75% and a second CAP of 2.75%. On May 2, 2017, the Company contracted an interest rate SWAP with HSBC, in order to cover the risk of an increased interest rate, related to the issuance of the “GAP 17” with a value of Ps.1,500,000, which were issued at an interest rate TIIE and was swapped to 7.21% fixed rate, until the end of the debt securities certificates. On February 26, 2019, the Company contracted an interest rate SWAP with Scotiabank, in order to cover the risk of an increased interest rate, related to the issuance of the “GAP 17-2” with a value of Ps. 2,300,000 which were issued at an interest rate TIIE and was swapped to 8.0315% fixed rate, until the end of the debt securities. Changes in fair value are recognized in other comprehensive income in the statement of income and other comprehensive income and are presented in the hedge reserve and are recycled to financial expenses to the extent that the interest of the associated debt is recognized. On February 27, 2019, the Company contracted an interest rate SWAP with Scotiabank, in order to cover the risk of an increased interest rate, related to the issuance of the “GAP-19” with a value of Ps. 3,000,000 which were issued at an interest rate TIIE and was swapped to 8.03% fixed rate, until the end of the debt securities. Changes in fair value are recognized in other comprehensive income in the statement of income and other comprehensive income and are presented in the hedge reserve and are recycled to financial expenses to the extent that the interest of the associated debt is recognized. These financial instruments with HSBC and the financial instrument of Scotiabank to cover the debt security “GAP 15” for Ps. 2,200,000 were not entered into for speculative purposes, but neither were formally designated and therefore did not qualify as hedging instruments for accounting purposes and as a result changes in their fair value and are recognized in profit or loss within finance cost. The financial instruments with Scotiabank to cover the debt securities “GAP 17-2” and “GAP 19” were entered into for speculative purposes and were formally designated and therefore did qualify as hedging instruments for accounting purposes and as a result changes in their fair value are recognized in OCI and profit or loss in the financial instrument of cash flow hedges reserve. The main characteristics and the fair value of these derivatives as of December 31, 2017, 2018 and 2019 are as follows:
|  | Notional amount (millions) |  |  | Hedge start date |  | Rate |  |  | Floor |  |  | CAP 1 |  |  | CAP 2 |  |  | Due date |  | Fair value as of December 31, 2017 |
HSBC |  | USD | $ | 95.5 |  |  | March 2016 |  | Libor 30 |  |  |  | 0.42 | % |  |  | 1.75 | % |  |  | 2.75 | % |  | January 2021 |  | Ps. |  | 16,442 |
HSBC |  | USD | $ | 95.5 |  |  | March 2016 |  | Libor 30 |  |  |  | 0.42 | % |  |  | 1.75 | % |  |  | 2.75 | % |  | February 2021 |  |  |  | 16,753 |
Scotiabank |  | Ps. |  | 2,200.0 |  |  | April 2016 |  | TIIE 28 |  |  |  | 4.05 | % |  |  | 5.75 | % |  |  | 6.75 | % |  | February 2021 |  |  |  | 37,577 |
HSBC |  | Ps. |  | 1,500.0 |  |  | May 2017 |  | 7.21% |  |  |  | — |  |  |  | — |  |  |  | — |  |  | March 2022 |  |  |  | 36,043 |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Ps. |  | 106,815 |
|  | Notional amount (millions) |  |  | Hedge start date |  | Rate |  |  | Floor |  |  | CAP 1 |  |  | CAP 2 |  |  | Due date |  | Fair value as of December 31, 2018 |
HSBC |  | USD | $ | 95.5 |  |  | March 2016 |  | Libor 30 |  |  |  | 0.42 | % |  |  | 1.75 | % |  |  | 2.75 | % |  | January 2021 |  | Ps. |  | 25,572 |
HSBC |  | USD | $ | 95.5 |  |  | March 2016 |  | Libor 30 |  |  |  | 0.42 | % |  |  | 1.75 | % |  |  | 2.75 | % |  | February 2021 |  |  |  | 26,369 |
Scotiabank |  | Ps. |  | 2,200.0 |  |  | April 2016 |  | TIIE 28 |  |  |  | 4.05 | % |  |  | 5.75 | % |  |  | 6.75 | % |  | February 2020 |  |  |  | 24,257 |
HSBC |  | Ps. |  | 1,500.0 |  |  | May 2017 |  | 7.21% |  |  |  | — |  |  |  | — |  |  |  | — |  |  | March 2022 |  |  |  | 60,259 |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Ps. |  | 136,457 |
|  | Notional amount (millions) |  |  | Hedge start date |  | Rate |  | Floor |  |  | CAP 1 |  |  | CAP 2 |  |  | Due date |  | Fair value as of December 31, 2019 |
HSBC |  | USD | $ | 95.5 |  |  | March 2016 |  | Libor 30 |  |  | 0.42 | % |  |  | 1.75 | % |  |  | 2.75 | % |  | January 2021 |  | Ps. |  | 667 |
HSBC |  | USD | $ | 95.5 |  |  | March 2016 |  | Libor 30 |  |  | 0.42 | % |  |  | 1.75 | % |  |  | 2.75 | % |  | February 2021 |  |  |  | 619 |
Scotiabank |  | Ps. |  | 2,200.0 |  |  | April 2016 |  | TIIE 28 |  |  | 4.05 | % |  |  | 5.75 | % |  |  | 6.75 | % |  | February 2020 |  |  |  | 3,400 |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Ps. |  | 4,686 |
HSBC |  | Ps. |  | 1,500.0 |  |  | May 2017 |  | 7.21% |  |  | — |  |  |  | — |  |  |  | — |  |  | March 2022 |  | Ps. |  | (17,998 | )
Scotiabank |  | Ps. |  | 2,300.0 |  |  | February 2019 |  | 8.0315% |  |  | — |  |  |  | — |  |  |  | — |  |  | November 2022 |  |  |  | (86,998 | )
Scotiabank |  | Ps. |  | 3,000.0 |  |  | February 2019 |  | 8.03% |  |  | — |  |  |  | — |  |  |  | — |  |  | March 2024 |  |  |  | (160,983 | )
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Ps. |  | (265,979 | )
For the years ended December 31, 2017 and 2018 a gain of Ps. 34,361 and Ps. 29,642 respectively, were recognized within finance income as income of the period, due to the net income of the period for its extrinsic value presented net within the finance cost line and on December 31, 2019, an amount of Ps. 149,770 was recognized, as a net expense of the period for the extrinsic value, being presented net within the finance cost line. No amount has been recognized within other comprehensive income items during the year ended December 31, 2017 and 2018, due to the intrinsic value of the coverage. As of December 31, 2019, Ps. 172,094 has been recognized in the reserve for the loss of the fair value of the coverage for cash flow hedges of the “GAP 17-2” and “GAP 19” certificates. On March 4, 2016, started the hedge of the variable interest rate generated. During 2019, coverage was used because the 30-day Libor exceeded the CAP 1 of 1.75%. As of December 31, 2018 and 2019, the Company recognized an income of Ps. 9,919 and Ps. 19,275, respectively, for the application of coverage in the comprehensive financing result in the interest line. On April 1, 2016, started the hedge of the variable interest rate generated. During 2019, coverage was used because the 28-day TIIE rate exceeded the CAP 1 of 5.75%. As of December 31, 2017, 2018 and 2019, the Company recognized an income of Ps. 19,607, Ps. 22,856 and Ps. 22,305, respectively, in favor of the Company for the application of the coverage because the fixed rate agreed in the SWAP was lower than the TIIE. On May 4, 2017, started the hedge of the variable interest rate generated by the debt securities issued in April 2017; These debt securities were placed at a 28-day TIIE variable rate plus 49 basis points, so a SWAP was contracted to convert it to a fixed rate of 7.21%. As of December 31, 2018 and 2019 an amount of Ps. 11,517 and Ps. 17,300 respectively, was recognized a finance income in favor of the Company for the application of the hedge, because the fixed rate contracted in the SWAP was lower than the TIIE. On February 26, 2019, started the hedge of the variable interest rate generated by the debt securities issued in November 2017; These debt securities were placed at a 28-day TIIE variable rate plus 44 basis points, so a SWAP was contracted to convert it to a fixed rate of 8.0315%. As of December 31, 2019 an amount of Ps. 6,450 was recognized as a finance income in favor of the Company and Ps. 559 were recognized to finance cost for the application of the hedge, because the fixed rate contracted in the SWAP was lower than the TIIE. On February 27, 2019, started the hedge of the variable interest rate generated by the debt securities issued in March 2019; These stock certificates were placed at a 28-day TIIE variable rate plus 45 basis points, so a SWAP was contracted to convert it to a fixed rate of 8.03%. As of December 31, 2019 an amount of Ps.6,828 was recognized as a finance income in favor of the Company and Ps. 725 were recognized to finance cost for the application of the hedge, because the fixed rate contracted in the SWAP was lower than the TIIE.

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