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Financial Assets and Liabilities | 12 Months Ended
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Dec. 31, 2020
Disclosure Of Financial Assets And Liabilities [Abstract] |
Financial Assets and Liabilities |
28. | Financial Assets and Liabilities
We have various financial assets such as trade and non-trade receivables, cash and short-term deposits. Our principal financial liabilities, other than derivatives, comprise of bank loans, lease liabilities, trade and non-trade payables. The main purpose of these financial liabilities is to finance our operations. We also enter into derivative transactions, primarily principal only-currency swap agreements, interest rate swaps and forward foreign exchange contracts and options to manage the currency and interest rate risks arising from our operations and sources of financing. Our accounting policies in relation to derivatives are set out in Note 2 – Summary of Significant Accounting Policies – Financial Instruments. The following table sets forth our consolidated financial assets and financial liabilities as at December 31, 2020 and 2019:
|  | Cash and cash equivalents |  |  | Financial instruments at amortized cost |  |  | Financial instruments at FVPL |  |  | Financial instruments at FVOCI |  |  | Total financial instruments |
|  | (in million pesos) |
Assets as at December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noncurrent: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through profit or loss |  |  | — |  |  |  | — |  |  |  | 380 |  |  |  | — |  |  |  | 380 |
Debt instruments at amortized cost – net of current portion |  |  | — |  |  |  | 1,153 |  |  |  | — |  |  |  | — |  |  |  | 1,153 |
Other financial assets – net of current portion |  |  | — |  |  |  | 2,915 |  | (1) |  | — |  |  |  | — |  |  |  | 2,915 |
Current: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 40,237 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 40,237 |
Short-term investments |  |  | — |  |  |  | 508 |  |  |  | 481 |  | (2) |  | — |  |  |  | 989 |
Trade and other receivables |  |  | — |  |  |  | 22,053 |  |  |  | — |  |  |  | — |  |  |  | 22,053 |
Current portion of derivative financial assets |  |  | — |  |  |  | — |  |  |  | 22 |  |  |  | — |  |  |  | 22 |
Current portion of financial assets at fair value through other comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 168 |  |  |  | 168 |
Current portion of other financial assets |  |  | — |  |  |  | 200 |  | (1) |  | 6,972 |  | (3) |  | — |  |  |  | 7,172 |
Total assets |  |  | 40,237 |  |  |  | 26,829 |  |  |  | 7,855 |  |  |  | 168 |  |  |  | 75,089 |
Liabilities as at December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noncurrent: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing financial liabilities – net of current portion |  |  | — |  |  |  | 205,195 |  |  |  | — |  |  |  | — |  |  |  | 205,195 |
Lease liabilities – net of current portion |  |  | — |  |  |  | 15,982 |  |  |  | — |  |  |  | — |  |  |  | 15,982 |
Derivative financial liabilities – net of current portion |  |  | — |  |  |  | — |  |  |  | 360 |  |  |  | — |  |  |  | 360 |
Customers' deposits |  |  | — |  |  |  | 2,371 |  |  |  | — |  |  |  | — |  |  |  | 2,371 |
Deferred credits and other noncurrent liabilities |  |  | — |  |  |  | 1,683 |  |  |  | — |  |  |  | — |  |  |  | 1,683 |
Current: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable |  |  | — |  |  |  | 80,051 |  |  |  | — |  |  |  | — |  |  |  | 80,051 |
Accrued expenses and other current liabilities |  |  | — |  |  |  | 79,000 |  |  |  | 7,849 |  |  |  | — |  |  |  | 86,849 |
Current portion of interest-bearing financial liabilities |  |  | — |  |  |  | 17,570 |  |  |  | — |  |  |  | — |  |  |  | 17,570 |
Current portion of lease liabilities |  |  | — |  |  |  | 4,043 |  |  |  | — |  |  |  | — |  |  |  | 4,043 |
Dividends payable |  |  | — |  |  |  | 1,194 |  |  |  | — |  |  |  | — |  |  |  | 1,194 |
Current portion of derivative financial liabilities |  |  | — |  |  |  | — |  |  |  | 176 |  |  |  | — |  |  |  | 176 |
Total liabilities |  |  | — |  |  |  | 407,089 |  |  |  | 8,385 |  |  |  | — |  |  |  | 415,474 |
Net assets (liabilities) |  |  | 40,237 |  |  |  | (380,260 | ) |  |  | (530 | ) |  |  | 168 |  |  |  | (340,385 | )
| (1) | Includes refundable deposits and notes receivables.
| (2) | In December 2020, PLDT invested US$10.0 million in the Supply Chain Finance of Cedit Suisse equivalent to 9,114.59 shares. The fund is invested in Notes backed by buyer-confirmed trade receivables/buyer payment undertakings, supplier payment undertakings and account receivables. Underlying credit risk of the Notes is insured by an insurance company with ratings of at least A by S&P and A2 by Moodys. As at December 31, 2020, the fund’s value is US$10.01 million.
| (3) | Includes RCBC Redemption Trust Account. See Note 20 – Equity – Redemption of Preferred Stock.
|  | Cash and cash equivalents |  |  | Financial instruments at amortized cost |  |  | Financial instruments at FVPL |  |  | Financial instruments at FVOCI |  |  | Total financial instruments |
|  | (in million pesos) |
Assets as at December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noncurrent: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through profit or loss |  |  | — |  |  |  | — |  |  |  | 3,369 |  |  |  | — |  |  |  | 3,369 |
Derivative financial assets – net of current portion |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 1 |
Financial assets at fair value through other comprehensive income – net of current portion |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 162 |  |  |  | 162 |
Other financial assets – net of current portion |  |  | — |  |  |  | 1,986 |  |  |  | — |  |  |  | — |  |  |  | 1,986 |
Current: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 24,369 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 24,369 |
Short-term investments |  |  | — |  |  |  | 314 |  |  |  | — |  |  |  | — |  |  |  | 314 |
Trade and other receivables |  |  | — |  |  |  | 22,436 |  |  |  | — |  |  |  | — |  |  |  | 22,436 |
Current portion of derivative financial assets |  |  | — |  |  |  | — |  |  |  | 41 |  |  |  | — |  |  |  | 41 |
Current portion of debt instruments at amortized cost |  |  | — |  |  |  | 150 |  |  |  | — |  |  |  | — |  |  |  | 150 |
Current portion of financial assets at fair value through other comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,757 |  |  |  | 2,757 |
Current portion of other financial assets |  |  | — |  |  |  | 1,220 |  |  |  | 6,866 |  |  |  | — |  |  |  | 8,086 |
Total assets |  |  | 24,369 |  |  |  | 26,106 |  |  |  | 10,277 |  |  |  | 2,919 |  |  |  | 63,671 |
Liabilities as at December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noncurrent: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing financial liabilities – net of current portion |  |  | — |  |  |  | 172,834 |  |  |  | — |  |  |  | — |  |  |  | 172,834 |
Lease liabilities – net of current portion |  |  | — |  |  |  | 13,100 |  |  |  | — |  |  |  | — |  |  |  | 13,100 |
Derivative financial liabilities – net of current portion |  |  | — |  |  |  | — |  |  |  | 25 |  |  |  | — |  |  |  | 25 |
Customers' deposits |  |  | — |  |  |  | 2,205 |  |  |  | — |  |  |  | — |  |  |  | 2,205 |
Deferred credits and other noncurrent liabilities |  |  | — |  |  |  | 2,179 |  |  |  | — |  |  |  | — |  |  |  | 2,179 |
Current: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable |  |  | — |  |  |  | 76,384 |  |  |  | — |  |  |  | — |  |  |  | 76,384 |
Accrued expenses and other current liabilities |  |  | — |  |  |  | 73,303 |  |  |  | 7,851 |  |  |  | — |  |  |  | 81,154 |
Current portion of interest-bearing financial liabilities |  |  | — |  |  |  | 19,722 |  |  |  | — |  |  |  | — |  |  |  | 19,722 |
Current portion of lease liabilities |  |  | — |  |  |  | 3,215 |  |  |  | — |  |  |  | — |  |  |  | 3,215 |
Dividends payable |  |  | — |  |  |  | 1,584 |  |  |  | — |  |  |  | — |  |  |  | 1,584 |
Current portion of derivative financial liabilities |  |  | — |  |  |  | — |  |  |  | 88 |  |  |  | — |  |  |  | 88 |
Total liabilities |  |  | — |  |  |  | 364,526 |  |  |  | 7,964 |  |  |  | — |  |  |  | 372,490 |
Net assets (liabilities) |  |  | 24,369 |  |  |  | (338,420 | ) |  |  | 2,313 |  |  |  | 2,919 |  |  |  | (308,819 | )
The following table sets forth our consolidated offsetting of financial assets and liabilities recognized as at December 31, 2020 and 2019:
|  | Gross amounts of recognized financial assets and liabilities |  |  | Gross amounts of recognized financial assets and liabilities set-off in the consolidated statements of financial position |  |  | Net amount presented in the consolidated statements of financial position |
|  | (in million pesos) |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |
Current Financial Assets |  |  |  |  |  |  |  |  |  |  |  |
Trade and other receivables |  |  |  |  |  |  |  |  |  |  |  |
Foreign administrations |  |  | 7,161 |  |  |  | 5,877 |  |  |  | 1,284 |
Domestic carriers |  |  | 717 |  |  |  | 552 |  |  |  | 165 |
Total |  |  | 7,878 |  |  |  | 6,429 |  |  |  | 1,449 |
Current Financial Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable |  |  |  |  |  |  |  |  |  |  |  |
Suppliers and contractors |  |  | 75,394 |  |  |  | 72 |  |  |  | 75,322 |
Carriers and other customers |  |  | 7,128 |  |  |  | 2,699 |  |  |  | 4,429 |
Total |  |  | 82,522 |  |  |  | 2,771 |  |  |  | 79,751 |
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |
Current Financial Assets |  |  |  |  |  |  |  |  |  |  |  |
Trade and other receivables |  |  |  |  |  |  |  |  |  |  |  |
Foreign administrations |  |  | 5,857 |  |  |  | 4,338 |  |  |  | 1,519 |
Domestic carriers |  |  | 1,018 |  |  |  | 219 |  |  |  | 799 |
Total |  |  | 6,875 |  |  |  | 4,557 |  |  |  | 2,318 |
Current Financial Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable |  |  |  |  |  |  |  |  |  |  |  |
Suppliers and contractors |  |  | 68,121 |  |  |  | 70 |  |  |  | 68,051 |
Carriers and other customers |  |  | 11,437 |  |  |  | 3,706 |  |  |  | 7,731 |
Total |  |  | 79,558 |  |  |  | 3,776 |  |  |  | 75,782 |
There are no financial instruments subject to an enforceable master netting arrangement as at December 31, 2020 and 2019. The following table sets forth our consolidated carrying values and estimated fair values of our financial assets and liabilities recognized as at December 31, 2020 and 2019 other than those whose carrying amounts are reasonable approximations of fair values:
|  | Carrying Value |  |  | Fair Value |
|  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
|  | (in million pesos) |
Noncurrent Financial Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt instruments at amortized cost |  |  | 1,153 |  |  |  | — |  |  |  | 1,163 |  |  |  | — |
Other financial assets – net of current portion |  |  | 2,915 |  |  |  | 1,986 |  |  |  | 2,561 |  |  |  | 1,657 |
Total |  |  | 4,068 |  |  |  | 1,986 |  |  |  | 3,724 |  |  |  | 1,657 |
Noncurrent Financial Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt – net of current portion |  |  | 205,195 |  |  |  | 172,834 |  |  |  | 213,908 |  |  |  | 169,965 |
Customers' deposits |  |  | 2,371 |  |  |  | 2,205 |  |  |  | 1,821 |  |  |  | 1,539 |
Deferred credits and other noncurrent liabilities |  |  | 1,683 |  |  |  | 2,179 |  |  |  | 1,562 |  |  |  | 1,953 |
Total |  |  | 209,249 |  |  |  | 177,218 |  |  |  | 217,291 |  |  |  | 173,457 |
Below is the list of our consolidated financial assets and liabilities carried at fair value that are classified using a fair value hierarchy as required for our complete sets of consolidated financial statements as at December 31, 2020 and 2019. This classification provides a reasonable basis to illustrate the nature and extent of risks associated with those financial statements.
|  | 2020 |  |  | 2019 |
|  | Level 1(1) |  |  | Level 2(2) |  |  | Level 3(3) |  |  | Total |  |  | Level 1(1) |  |  | Level 2(2) |  |  | Level 3(3) |  |  | Total |
|  | (in million pesos) |
Noncurrent Financial Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets at FVPL |  |  | 61 |  |  |  | 294 |  |  |  | 25 |  |  |  | 380 |  |  |  | 2,442 |  |  |  | 304 |  |  |  | 623 |  |  |  | 3,369 |
Derivative financial assets – net of current portion |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 1 |
Financial assets at FVOCI – net of current portion |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 162 |  |  |  | — |  |  |  | 162 |
Current Financial Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Short-term investments |  |  | — |  |  |  | 481 |  |  |  | — |  |  |  | 481 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Current portion of derivative financial assets |  |  | — |  |  |  | 22 |  |  |  | — |  |  |  | 22 |  |  |  | — |  |  |  | 41 |  |  |  | — |  |  |  | 41 |
Current portion of FVOCI |  |  | — |  |  |  | 168 |  |  |  | — |  |  |  | 168 |  |  |  | — |  |  |  | 2,757 |  |  |  | — |  |  |  | 2,757 |
Current portion of other financial assets |  |  | — |  |  |  | 6,972 |  |  |  | — |  |  |  | 6,972 |  |  |  | — |  |  |  | 6,866 |  |  |  | — |  |  |  | 6,866 |
Total |  |  | 61 |  |  |  | 7,937 |  |  |  | 25 |  |  |  | 8,023 |  |  |  | 2,442 |  |  |  | 10,131 |  |  |  | 623 |  |  |  | 13,196 |
Noncurrent Financial Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative financial liabilities – net of current portion |  |  | — |  |  |  | 360 |  |  |  | — |  |  |  | 360 |  |  |  | — |  |  |  | 25 |  |  |  | — |  |  |  | 25 |
Current Financial Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accrued expenses and other current liabilities |  |  | — |  |  |  | 7,849 |  |  |  | — |  |  |  | 7,849 |  |  |  | — |  |  |  | 7,851 |  |  |  | — |  |  |  | 7,851 |
Current portion of derivative financial liabilities |  |  | — |  |  |  | 176 |  |  |  | — |  |  |  | 176 |  |  |  | — |  |  |  | 88 |  |  |  | — |  |  |  | 88 |
Total |  |  | — |  |  |  | 8,385 |  |  |  | — |  |  |  | 8,385 |  |  |  | — |  |  |  | 7,964 |  |  |  | — |  |  |  | 7,964 |
| (1) | Fair values determined using observable market inputs that reflect quoted prices in active markets for identical assets or liabilities.
| (2) | Fair values determined using inputs other than quoted market prices that are either directly or indirectly observable for the assets or liabilities.
| (3) | Fair values determined using discounted values of future cash flows for the assets or liabilities.
As at December 31, 2020 and 2019, there were no transfers into and out of Level 3 fair value measurements. As at December 31, 2020 and 2019, there were no transfers between Level 1 and Level 2 fair value measurements. The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate such value: Long-term financial assets and liabilities: Fair value is based on the following:
Type |  | Fair Value Assumptions |  | Fair Value Hierarchy
Noncurrent portion of advances and other noncurrent assets |  | Estimated fair value is based on the discounted values of future cash flows using the applicable zero-coupon rates plus counterparties’ credit spread. |  | Level 3
Fixed Rate Loans: U.S. Dollar notes |  | Quoted market price. |  | Level 1
Investment in debt securities |  | Fair values were determined using quoted prices. For non-quoted securities, fair values were determined using discounted cash flow based on market observable rates. |  | Level 1 Level 2 Level 3
Other loans in all other currencies |  | Estimated fair value is based on the discounted value of future cash flows using the applicable Commercial Interest Reference Rate and BVAL rates for similar types of loans plus PLDT’s credit spread. |  | Level 3
Variable Rate Loans |  | The carrying value approximates fair value because of recent and regular repricing based on market conditions. |  | Level 2
Derivative Financial Instruments Forward foreign exchange contracts, foreign currency swaps and interest rate swaps: The fair values were computed as the present value of estimated future cash flows using market U.S. Dollar and Philippine Peso interest rates as at valuation date. The valuation techniques considered various inputs including the credit quality of counterparties. Due to the short-term nature of the transactions, the fair value of cash and cash equivalents, short-term investments, trade and other receivables, accounts payable, accrued expenses and other current liabilities and dividends payable approximate their carrying values as at the end of the reporting period. Our derivative financial instruments are accounted for as either cash flow hedges or transactions not designated as hedges. Cash flow hedges refer to those transactions that hedge our exposure to variability in cash flows attributable to a particular risk associated with a recognized financial asset or liability and exposures arising from forecast transactions. Changes in the fair value of these instruments representing effective hedges are recognized directly in other comprehensive income until the hedged item is recognized in our consolidated income statement. For transactions that are not designated as hedges, any gains or losses arising from the changes in fair value are recognized directly to income for the period. As at December 31, 2020 and 2019, we have taken into account the counterparties’ credit risks (for derivative assets) and our own non-performance risk (for derivative liabilities) and have included a credit or debit valuation adjustment, as appropriate, by assessing the maximum credit exposure and taking into account market-based inputs which considers the risk of default occurring and corresponding losses once the default event occurs. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognized at fair value. The table below sets out the information about our consolidated derivative financial instruments as at December 31, 2020 and 2019:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2020 |  |  | 2019 |
|  | Original Notional Amount |  | Trade Date |  | Underlying Transaction in U.S. Dollar |  | Termination Date |  | Weighted Average Hedge Cost |  |  | Weighted Average Foreign Exchange Rate |  |  | Notional Amount |  |  | Net Mark- to- market Losses in Php |  |  | Notional Amount |  |  | Net Mark- to- market Gains (Losses) in Php |
|  | (in millions) |  |  |  | (in millions) |  |  |  |  |  |  |  |  |  |  |  | (in millions) |
Transactions not designated as hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
PLDT |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts |  | US$16 |  | Various dates in October 2020 to January 2021 |  | U.S. Dollar Liabilities |  | Various dates in January to April 2021 |  |  | — |  |  | Php48.40 |  |  | US$13 |  |  |  | (5 | ) |  | US$22 |  |  |  | (12 | )
|  | US$45 |  | January to February 2021 |  | U.S. Dollar Liabilities |  | Various dates in March to June 2021 |  |  | — |  |  | Php48.26 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | EUR5 |  | Various dates in July and August 2019 |  | EUR Assets |  | January 2020 |  |  | — |  |  | Php58.65 |  |  |  | — |  |  |  | — |  |  | EUR5 |  |  |  | 8 |
Smart |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts |  | US$144 |  | Various dates in 2018 and 2019 |  | U.S. Dollar Liabilities |  | Various dates in 2019 |  |  | — |  |  | Php52.73 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | US$260 |  | Various dates in 2019 and 2020 |  | U.S. Dollar Liabilities |  | Various dates in 2020 |  |  | — |  |  | Php50.77 |  |  |  | — |  |  |  | — |  |  | US$41 |  |  |  | (22 | )
|  | US$26 |  | Various dates in 2020 |  | U.S. Dollar Liabilities |  | Various dates in 2021 |  |  | — |  |  | Php48.44 |  |  | US$26 |  |  |  | (9 | ) |  |  | — |  |  |  | — |
|  | US$69 |  | January to March 2021 |  | U.S. Dollar Liabilities |  | February to June 2021 |  |  | — |  |  | Php48.42 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
PCEV |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts |  | US$22 |  | Various dates in 2019 |  | U.S. Dollar Cash Conversion |  | Various dates in 2019 |  |  | — |  |  | Php52.24 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (14 | ) |  |  |  |  |  |  | (26 | )
Transactions designated as hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
PLDT |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps(a) |  | US$100 |  | August 2014 |  | 100 PNB |  | August 11, 2020 |  |  | 3.46 | % |  |  | — |  |  |  | — |  |  |  | — |  |  | US$95 |  |  |  | (6 | )
|  | US$50 |  | September 2014 |  | 50 Metrobank |  | September 2, 2020 |  |  | 3.47 | % |  |  | — |  |  |  | — |  |  |  | — |  |  | US$48 |  |  |  | (5 | )
|  | US$150 |  | April and June 2015 |  | 200 Term Loan |  | February 25, 2022 |  |  | 2.70 | % |  |  | — |  |  | US$34 |  |  |  | (25 | ) |  | US$56 |  |  |  | 2 |
Long-term currency swaps(b) |  | US$4 |  | January 2017 |  | 100 PNB |  | August 11, 2020 |  |  | 1.01 | % |  | Php49.79 |  |  |  | — |  |  |  | — |  |  | US$1 |  |  |  | 1 |
|  | US$6 |  | April and June 2017 |  | 200 MUFG Bank, Ltd. |  | August 26,2019 |  |  | 1.63 | % |  | Php49.51 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | US$2 |  | January 2018 |  | 200 MUFG Bank, Ltd. |  | August 26,2019 |  |  | 1.59 | % |  | Php49.86 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | US$6 |  | February 2018 |  | 200 MUFG Bank, Ltd. |  | February 26, 2020 |  |  | 1.82 | % |  | Php51.27 |  |  |  | — |  |  |  | — |  |  | US$1 |  |  |  | (2 | )
|  | US$27 |  | November 2018 to August 2020 |  | 200 MUFG Bank, Ltd. |  | February 25, 2022 |  |  | 2.15 | % |  | Php50.78 |  |  | US$16 |  |  |  | (52 | ) |  | US$17 |  |  |  | (30 | )
Long-term foreign currency options(c) |  | US$200 |  | Various dates in July 2020 and February 2021 |  | 300M Notes 2031 |  | January 23, 2031 |  |  | 1.26 | % |  | Php50.00 Php56.00 |  |  | US$200 |  |  |  | (406 | ) |  |  | — |  |  |  | — |
|  | US$80 |  | February to March 2021 |  | 300M Notes 2031 |  | January 23, 2031 |  |  | 1.07 | % |  | Php48.75 Php53.69 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (483 | ) |  |  |  |  |  |  | (40 | )
Smart |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps(d) |  | US$85 |  | Various dates in 2014 and 2015 |  | 100 Bank of Tokyo |  | March 7, 2019 |  |  | 2.23 | % |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | US$50 |  | October 2, 2014 |  | 50 Mizuho |  | May 14, 2019 |  |  | 2.58 | % |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | US$200 |  | Various dates in 2015 |  | 200 Mizuho |  | March 4, 2020 |  |  | 2.10 | % |  |  | — |  |  |  | — |  |  |  | — |  |  | US$22 |  |  |  | 4 |
|  | US$30 |  | February 2016 |  | 100 Mizuho |  | December 7, 2021 |  |  | 2.03 | % |  |  | — |  |  | US$6 |  |  |  | (2 | ) |  | US$12 |  |  |  | 5 |
Long-term currency swaps(e) |  | US$18 |  | Various dates in 2017, 2018 and 2019 |  | 100 Mizuho |  | December 7, 2020 |  |  | 1.76 | % |  | Php50.98 |  |  |  | — |  |  |  | — |  |  | US$9 |  |  |  | (3 | )
|  | US$13 |  | Various dates in 2018 and 2019 |  | 200 Mizuho |  | March 4, 2020 |  |  | 2.06 | % |  | Php51.93 |  |  |  | — |  |  |  | — |  |  | US$4 |  |  |  | (6 | )
|  | US$6 |  | February 2019 |  | 100 Mizuho |  | December 7, 2021 |  |  | 2.22 | % |  | Php51.83 |  |  | US$2 |  |  |  | (8 | ) |  | US$4 |  |  |  | (5 | )
|  | US$6 |  | August 2020 |  | 100 Mizuho |  | December 7, 2022 |  |  | 1.99 | % |  | Php48.64 |  |  | US$6 |  |  |  | (7 | ) |  |  | — |  |  |  | — |
Long-term foreign currency options(f) |  | US$80 |  | February to March 2021 |  | 140 PNB |  | December 13, 2030 |  |  | 1.64 | % |  | Php48.00 Php53.48 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (17 | ) |  |  |  |  |  |  | (5 | )
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (514 | ) |  |  |  |  |  |  | (71 | )
| (a) | PLDT’s interest rate swap agreements outstanding as at December 31, 2020 and 2019 were designated as cash flow hedges, wherein the effective portion of the movements in fair value is recognized in our consolidated statements of other comprehensive income, while any ineffective portion is recognized immediately in our consolidated income statements. The mark-to-market losses amounting to Php16 million and Php11 million were recognized in our consolidated statements of other comprehensive income as at December 31, 2020 and 2019, respectively. Interest accrual on the interest rate swaps amounting to Php9 million and Php2 million were recorded as at December 31, 2020 and 2019, respectively. There were no ineffective portion in the fair value recognized in our consolidated income statements for the years ended December 31, 2020 and 2019.
| (b) | PLDT’s long-term principal only-currency swap agreements outstanding as at December 31, 2020 and 2019 were designated as cash flow hedges, wherein effective portion of the movements in the fair value is recognized in our consolidated statements of other comprehensive income, while any ineffective portion is recognized immediately in our consolidated income statements. The mark-to-market losses amounting to Php46 million and Php23 million were recognized in our consolidated statements of other comprehensive income as at December 31, 2020 and 2019, respectively. Hedge cost accrual on the long-term principal only-currency swaps amounting to Php6 million and Php7 million were recognized as at December 31, 2020 and 2019, respectively. The amounts recognized as other comprehensive income are transferred to profit or loss when the hedged loan is revalued for changes in the foreign exchange rate. The hedge cost portion of the movements in the fair value amounting to Php2 million were recognized in our consolidated income statements for each of the years ended December 31, 2020 and 2019.
| (c) | PLDT’s long-term foreign currency option agreements outstanding as at December 31, 2020 were designated as cash flow hedges, wherein the effective portion of the movements in fair value is recognized in our consolidated statements of other comprehensive income, while any ineffective portion is recognized immediately in our consolidated income statements. Settlement of the foreign currency option agreements will depend on the spot exchange rate on the fixing date. If the Philippine peso to U.S. dollar spot exchange rate on fixing date is between Php50.00 and Php56.00, PLDT will purchase the U.S. dollar at Php50.00. However, if on fixing date, the exchange rate is beyond Php56.00, PLDT will purchase the U.S. dollar at the prevailing Philippine peso to U.S. dollar spot exchange rate minus a subsidy of Php6.00, and if the exchange rate is lower than Php50.00, PLDT will purchase the U.S. dollar at the prevailing Philippine peso to U.S. dollar spot exchange rate. The mark-to-market losses amounting to Php342 million were recognized in our consolidated statement of other comprehensive income as at December 31, 2020. Hedge cost accrual on the long-term foreign currency option agreements amounting to Php64 million were recognized as at December 31, 2020. The intrinsic value of the long-term foreign currency options recognized as other comprehensive income are transferred to profit or loss when the hedged loan is revalued for changes in the foreign exchange rate. The hedge cost portion of the movements in the fair value amounting to Php26 million were recognized in our consolidated income statement for the year ended December 31, 2020.
| (d) | Smart’s interest rate swap agreements outstanding as at December 31, 2020 and, 2019 were designated as cash flow hedges, wherein the effective portion of the movements in fair value is recognized in our consolidated statements of other comprehensive income, while any ineffective portion is recognized immediately in our consolidated income statements. The mark-to-market loss amounting to Php2 million and mark-to-market gain amounting to Php6 million were recognized in our consolidated statements of other comprehensive income as at December 31, 2020 and 2019, respectively. Interest accrual amounting to Php197 thousand and interest reduction amounting to Php3 million were recognized as at December 31, 2020 and 2019, respectively. There were no ineffective portion in the fair value recognized in our consolidated income statements for the years ended December 31, 2020 and 2019.
| (e) | Smart’s long-term principal only-currency swap agreements outstanding as at December 31, 2020 and 2019 were designated as cash flow hedges, wherein the effective portion of the movements in fair value is recognized in our consolidated statements of other comprehensive income, while any ineffective portion is recognized immediately in our consolidated income statements. The mark-to-market losses amounting to Php13 million and Php12 million were recognized in our consolidated statements of other comprehensive income as at December 31, 2020 and 2019, respectively. Hedge cost accrual on the long-term principal only-currency swaps amounting to Php2 million each was recognized as at December 31, 2020 and 2019. The amounts recognized as other comprehensive income are transferred to profit or loss when the hedged loan is revalued for changes in the foreign exchange rate. The hedge cost portions of the movements in the fair value amounting to Php1 million each was recognized in our consolidated income statements for the years ended December 31, 2020 and 2019.
| (f) | Smart’s long-term foreign currency option agreements entered on various dates in February 2021 were designated as cash flow hedges, wherein the effective portion of the movements in fair value is recognized in our consolidated statements of other comprehensive income, while any ineffective portion is recognized immediately in our consolidated income statements. Settlement of the foreign currency option agreements will depend on the spot exchange rate on the fixing date. If the Philippine Peso to U.S. Dollar spot exchange rate on fixing date is between Php48.00 and Php54.00, Smart will purchase the U.S. Dollar at Php48.00. However, if on fixing date the exchange rate is beyond Php54.00, Smart will purchase the U.S. Dollar at the prevailing Philippine Peso to U.S. Dollar spot exchange rate minus a subsidy of Php6.00, and if the exchange rate is lower than Php48.00, Smart will purchase the U.S. Dollar at the prevailing Philippine Peso to U.S. Dollar spot exchange rate.
Our derivative financial instruments as at December 31, 2020 and 2019 are presented in the statements of financial position as follows:
|  | 2020 |  |  | 2019 |
|  | (in million pesos) |
Presented as: |  |  |  |  |  |  |  |
Noncurrent assets |  |  | — |  |  |  | 1 |
Current assets |  |  | 22 |  |  |  | 41 |
Noncurrent liabilities (Note 29) |  |  | (360 | ) |  |  | (25 | )
Current liabilities (Note 29) |  |  | (176 | ) |  |  | (88 | )
Net liabilities |  |  | (514 | ) |  |  | (71 | )
Movements of our consolidated mark-to-market gains (losses) for the years ended December 31, 2020 and 2019 are summarized as follows:
|  | 2020 |  |  | 2019 |
|  | (in million pesos) |
Net mark-to-market gains (losses) at beginning of the year |  |  | (71 | ) |  |  | 243 |
Settlements, interest expense and others |  |  | 430 |  |  |  | 235 |
Effective portion recognized in the profit or loss for the cash flow hedges |  |  | (156 | ) |  |  | 14 |
Losses on derivative financial instruments (Note 4) |  |  | (284 | ) |  |  | (233 | )
Net fair value losses on cash flow hedges charged to other comprehensive income |  |  | (433 | ) |  |  | (330 | )
Net mark-to-market losses at end of the year |  |  | (514 | ) |  |  | (71 | )
Our consolidated analysis of gains (losses) on derivative financial instruments for the years ended December 31, 2020, 2019 and 2018 are as follows:
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (in million pesos) |
Hedge costs |  |  | (94 | ) |  |  | (51 | ) |  |  | (49 | )
Gains (losses) on derivative financial instruments (Note 4) |  |  | (284 | ) |  |  | (233 | ) |  |  | 1,135 |
Net gains (losses) on derivative financial instruments (Notes 4 and 5) |  |  | (378 | ) |  |  | (284 | ) |  |  | 1,086 |
Financial Risk Management Objectives and Policies The main risks arising from our financial instruments are liquidity risk, foreign currency exchange risk, interest rate risk and credit risk. The importance of managing those risks has significantly increased in light of the considerable change and volatility in both the Philippine and international financial markets. Our Board of Directors reviews and approves policies for managing each of these risks, which are summarized below. We also monitor the market price risk arising from all financial instruments. Liquidity Risk Our exposure to liquidity risk refers to the risk that our financial requirements, working capital requirements and planned capital expenditures will not be met. We manage our liquidity profile to be able to finance our operations and capital expenditures, service our maturing debts and meet our other financial obligations. To cover our financing requirements, we use internally generated funds and proceeds from debt and equity issues and sales of certain assets. As part of our liquidity risk management program, we regularly evaluate our projected and actual cash flows, including our loan maturity profiles, and continuously assess conditions in the financial markets for opportunities to pursue fund-raising initiatives. These activities may include bank loans, export credit agency-guaranteed facilities, debt capital and equity market issues. Any excess funds are primarily invested in short-term and principal-protected bank products that provide flexibility of withdrawing the funds anytime. We also allocate a portion of our cash in longer tenor investments such as fixed income securities issued or guaranteed by the Republic of the Philippines, and Philippine banks and corporates and managed funds. We regularly evaluate available financial products and monitor market conditions for opportunities to enhance yields at acceptable risk levels. Our investments are also subject to certain restrictions contained in our debt covenants. Our funding arrangements are designed to keep an appropriate balance between equity and debt and to provide financing flexibility while enhancing our businesses. Our cash position remains sufficient to support our planned capital expenditure requirements and service our debt and financing obligations; however, we may be required to finance a portion of our future capital expenditures from external financing sources. We have cash and cash equivalents, and short-term investments amounting to Php40,237 million and Php989 million, respectively, as at December 31, 2020, which we can use to meet our short-term liquidity needs. See Note 16 – Cash and Cash Equivalents. The following table summarizes the maturity profile of our financial assets based on our consolidated undiscounted claims outstanding as at December 31, 2020 and 2019:
|  | Total |  |  | Less than 1 year |  |  | 1-3 years |  |  | 3-5 years |  |  | More than 5 years |
|  | (in million pesos) |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 30,711 |  |  |  | 30,711 |  |  |  | — |  |  |  | — |  |  |  | — |
Temporary cash investments |  |  | 30,711 |  |  |  | 30,711 |  |  |  | — |  |  |  | — |  |  |  | — |
Financial instruments at amortized cost: |  |  | 43,654 |  |  |  | 40,165 |  |  |  | 2,286 |  |  |  | 732 |  |  |  | 471 |
Other financial assets |  |  | 3,689 |  |  |  | 200 |  |  |  | 2,286 |  |  |  | 732 |  |  |  | 471 |
Debt instruments at amortized cost |  |  | 1,153 |  |  |  | 1,153 |  |  |  | — |  |  |  | — |  |  |  | — |
Short-term investments |  |  | 508 |  |  |  | 508 |  |  |  | — |  |  |  | — |  |  |  | — |
Retail subscribers |  |  | 17,142 |  |  |  | 17,142 |  |  |  | — |  |  |  | — |  |  |  | — |
Corporate subscribers |  |  | 13,318 |  |  |  | 13,318 |  |  |  | — |  |  |  | — |  |  |  | — |
Foreign administrations |  |  | 1,520 |  |  |  | 1,520 |  |  |  | — |  |  |  | — |  |  |  | — |
Domestic carriers |  |  | 226 |  |  |  | 226 |  |  |  | — |  |  |  | — |  |  |  | — |
Dealers, agents and others |  |  | 6,098 |  |  |  | 6,098 |  |  |  | — |  |  |  | — |  |  |  | — |
Financial instruments at FVPL: |  |  | 7,833 |  |  |  | 7,453 |  |  |  | — |  |  |  | — |  |  |  | 380 |
Financial assets at fair value through profit or loss |  |  | 380 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 380 |
Short-term investments |  |  | 481 |  |  |  | 481 |  |  |  | — |  |  |  | — |  |  |  | — |
Other financial assets |  |  | 6,972 |  |  |  | 6,972 |  |  |  | — |  |  |  | — |  |  |  | — |
Financial instruments at FVOCI: |  |  | 168 |  |  |  | 168 |  |  |  | — |  |  |  | — |  |  |  | — |
Financial assets at fair value through other comprehensive income |  |  | 168 |  |  |  | 168 |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | 82,366 |  |  |  | 78,497 |  |  |  | 2,286 |  |  |  | 732 |  |  |  | 851 |
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 17,663 |  |  |  | 17,663 |  |  |  | — |  |  |  | — |  |  |  | — |
Temporary cash investments |  |  | 17,663 |  |  |  | 17,663 |  |  |  | — |  |  |  | — |  |  |  | — |
Financial instruments at amortized cost: |  |  | 43,308 |  |  |  | 41,024 |  |  |  | 1,768 |  |  |  | 338 |  |  |  | 178 |
Other financial assets |  |  | 3,504 |  |  |  | 1,220 |  |  |  | 1,768 |  |  |  | 338 |  |  |  | 178 |
Debt instruments at amortized cost |  |  | 150 |  |  |  | 150 |  |  |  | — |  |  |  | — |  |  |  | — |
Short-term investments |  |  | 314 |  |  |  | 314 |  |  |  | — |  |  |  | — |  |  |  | — |
Retail subscribers |  |  | 17,178 |  |  |  | 17,178 |  |  |  | — |  |  |  | — |  |  |  | — |
Corporate subscribers |  |  | 13,005 |  |  |  | 13,005 |  |  |  | — |  |  |  | — |  |  |  | — |
Foreign administrations |  |  | 1,896 |  |  |  | 1,896 |  |  |  | — |  |  |  | — |  |  |  | — |
Domestic carriers |  |  | 889 |  |  |  | 889 |  |  |  | — |  |  |  | — |  |  |  | — |
Dealers, agents and others |  |  | 6,372 |  |  |  | 6,372 |  |  |  | — |  |  |  | — |  |  |  | — |
Financial instruments at FVPL: |  |  | 10,235 |  |  |  | 6,866 |  |  |  | — |  |  |  | — |  |  |  | 3,369 |
Financial assets at fair value through profit or loss |  |  | 3,369 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,369 |
Other financial assets |  |  | 6,866 |  |  |  | 6,866 |  |  |  | — |  |  |  | — |  |  |  | — |
Financial instruments at FVOCI: |  |  | 2,919 |  |  |  | 2,757 |  |  |  | 162 |  |  |  | — |  |  |  | — |
Financial assets at fair value through other comprehensive income |  |  | 2,919 |  |  |  | 2,757 |  |  |  | 162 |  |  |  | — |  |  |  | — |
Total |  |  | 74,125 |  |  |  | 68,310 |  |  |  | 1,930 |  |  |  | 338 |  |  |  | 3,547 |
The following table summarizes the maturity profile of our financial liabilities based on our consolidated contractual undiscounted obligations outstanding as at December 31, 2020 and 2019:
|  | Payments Due by Period |
|  | Total |  |  | Less than 1 year |  |  | 1-3 years |  |  | 3-5 years |  |  | More than 5 years |
|  | (in million pesos) |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt(1): |  |  | 292,639 |  |  |  | 12,562 |  |  |  | 74,960 |  |  |  | 51,659 |  |  |  | 153,458 |
Principal |  |  | 224,027 |  |  |  | 12,400 |  |  |  | 47,753 |  |  |  | 37,785 |  |  |  | 126,089 |
Interest |  |  | 68,612 |  |  |  | 162 |  |  |  | 27,207 |  |  |  | 13,874 |  |  |  | 27,369 |
Lease obligations |  |  | 29,312 |  |  |  | 10,995 |  |  |  | 8,897 |  |  |  | 5,068 |  |  |  | 4,352 |
Various trade and other obligations: |  |  | 169,808 |  |  |  | 165,750 |  |  |  | 2,010 |  |  |  | 36 |  |  |  | 2,012 |
Suppliers and contractors |  |  | 76,864 |  |  |  | 75,322 |  |  |  | 1,535 |  |  |  | 7 |  |  |  | — |
Utilities and related expenses |  |  | 64,580 |  |  |  | 64,577 |  |  |  | 3 |  |  |  | — |  |  |  | — |
Employee benefits |  |  | 10,404 |  |  |  | 10,404 |  |  |  | — |  |  |  | — |  |  |  | — |
Liability from redemption of preferred shares |  |  | 7,849 |  |  |  | 7,849 |  |  |  | — |  |  |  | — |  |  |  | — |
Customers’ deposits |  |  | 2,371 |  |  |  | — |  |  |  | 330 |  |  |  | 29 |  |  |  | 2,012 |
Carriers and other customers |  |  | 1,336 |  |  |  | 1,336 |  |  |  | — |  |  |  | — |  |  |  | — |
Dividends |  |  | 1,194 |  |  |  | 1,194 |  |  |  | — |  |  |  | — |  |  |  | — |
Others |  |  | 5,210 |  |  |  | 5,068 |  |  |  | 142 |  |  |  | — |  |  |  | — |
Total contractual obligations |  |  | 491,759 |  |  |  | 189,307 |  |  |  | 85,867 |  |  |  | 56,763 |  |  |  | 159,822 |
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt(1): |  |  | 243,226 |  |  |  | 19,014 |  |  |  | 66,052 |  |  |  | 54,146 |  |  |  | 104,014 |
Principal |  |  | 193,047 |  |  |  | 15,221 |  |  |  | 44,253 |  |  |  | 40,288 |  |  |  | 93,285 |
Interest |  |  | 50,179 |  |  |  | 3,793 |  |  |  | 21,799 |  |  |  | 13,858 |  |  |  | 10,729 |
Lease obligations |  |  | 25,465 |  |  |  | 10,458 |  |  |  | 6,879 |  |  |  | 4,401 |  |  |  | 3,727 |
Various trade and other obligations: |  |  | 153,255 |  |  |  | 148,839 |  |  |  | 2,405 |  |  |  | 38 |  |  |  | 1,973 |
Suppliers and contractors |  |  | 70,169 |  |  |  | 68,051 |  |  |  | 2,118 |  |  |  | — |  |  |  | — |
Utilities and related expenses |  |  | 51,875 |  |  |  | 51,843 |  |  |  | 32 |  |  |  | — |  |  |  | — |
Employee benefits |  |  | 8,673 |  |  |  | 8,673 |  |  |  | — |  |  |  | — |  |  |  | — |
Liability from redemption of preferred shares |  |  | 7,851 |  |  |  | 7,851 |  |  |  | — |  |  |  | — |  |  |  | — |
Customers’ deposits |  |  | 2,205 |  |  |  | — |  |  |  | 194 |  |  |  | 38 |  |  |  | 1,973 |
Dividends |  |  | 1,584 |  |  |  | 1,584 |  |  |  | — |  |  |  | — |  |  |  | — |
Carriers and other customers |  |  | 1,387 |  |  |  | 1,387 |  |  |  | — |  |  |  | — |  |  |  | — |
Others |  |  | 9,511 |  |  |  | 9,450 |  |  |  | 61 |  |  |  | — |  |  |  | — |
Total contractual obligations |  |  | 421,946 |  |  |  | 178,311 |  |  |  | 75,336 |  |  |  | 58,585 |  |  |  | 109,714 |
| (1) | Consists of long-term debt, including current portion; gross of unamortized debt discount and debt issuance costs.
Debt See Note 21 – Interest-bearing Financial Liabilities – Long-term Debt for a detailed discussion of our debt. Our consolidated future minimum lease commitments payable with non-cancellable leases as at December 31, 2020 and 2019 are as follows:
|  | 2020 |  |  | 2019 |
|  | (in million pesos) |
Within one year |  |  | 11,061 |  |  |  | 10,480 |
After one year but not more than five years |  |  | 13,899 |  |  |  | 11,258 |
More than five years |  |  | 4,352 |  |  |  | 3,727 |
Total |  |  | 29,312 |  |  |  | 25,465 |
Various Trade and Other Obligations PLDT Group has various obligations to suppliers for the acquisition of phone and network equipment, contractors for services rendered on various projects, foreign administrations and domestic carriers for the access charges, shareholders for unpaid dividends distributions, employees for benefits and other related obligations, and various business and operational related agreements. Total obligations under these various agreements amounted to approximately Php169,808 million and Php153,255 million as at December 31, 2020 and 2019, respectively. See Note 23 – Accounts Payable and Note 24 – Accrued Expenses and Other Current Liabilities. Commercial Commitments Our outstanding consolidated commercial commitments, in the form of letters of credit, amounted to nil as at December 31, 2020 and 2019. See Note 11 – Investments in Associates and Joint Ventures – Investments of PLDT in VTI, Bow Arken and Brightshare. Collateral There are no pledges as collaterals with respect to its financial liabilities as at December 31, 2020 and 2019. Foreign Currency Exchange Risk Foreign currency exchange risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The revaluation of our foreign currency-denominated financial assets and liabilities as a result of the appreciation or depreciation of the Philippine Peso is recognized as foreign exchange gains or losses as at the end of the reporting period. The extent of foreign exchange gains or losses is largely dependent on the amount of foreign currency denominated financial assets and liabilities. While a certain percentage of our revenues are either linked to or denominated in U.S. Dollars, a substantial portion of our capital expenditures, a portion of our indebtedness and related interest expense and a portion of our operating expenses are denominated in foreign currencies, mostly in U.S. Dollars. As such, a strengthening or weakening of the Philippine Peso against the U.S. Dollar will decrease or increase in Philippine Peso terms both the principal amount of our foreign currency-denominated debts and the related interest expense, our foreign currency-denominated capital expenditures and operating expenses as well as our U.S. Dollar-linked and U.S. Dollar-denominated revenues. In addition, many of our financial ratios and other financial tests are affected by the movements in the Philippine Peso to U.S. Dollar exchange rate. To manage our foreign exchange risks and to stabilize our cash flows in order to improve investment and cash flow planning, we enter into forward foreign exchange contracts, currency swap contracts, currency option contracts and other hedging products aimed at reducing and/or managing the adverse impact of changes in foreign exchange rates on our operating results and cash flows. Further details of the risk management strategy are recognized in our hedge designation documentation. We use forward foreign exchange purchase contracts, currency swap contracts and currency option contracts to manage the foreign currency risks associated with our foreign currency-denominated financial liabilities. We accounted for these instruments as either cash flow hedges, wherein changes in the fair value are recognized in our consolidated other comprehensive income until the hedged transaction affects our consolidated income statement or transactions not designated as hedges, wherein changes in the fair value are recognized directly as income or expense for the year. The impact of the hedging instruments on our consolidated statements of financial position as at December 31, 2020 and 2019 are as follows:
|  | Notional Amount |  |  | Carrying Amount |  |  | Line item in our Consolidated Statements
|  | (U.S. Dollar) |  |  | (Php) |  |  | of Financial Position
|  | (in million pesos) |  |  |
December 31, 2020 |  |  |  |  |  |  |  |  |  |
Long-term currency swaps |  |  | 24 |  |  |  | — |  |  | Derivative financial assets – net of current portion
|  |  | — |  |  |  | (14 | ) |  | Derivative financial liabilities – net of current portion
|  |  | — |  |  |  | (48 | ) |  | Current portion of derivative financial liabilities
Long-term foreign currency options |  |  | 200 |  |  |  | (342 | ) |  | Derivative financial liabilities – net of current portion
|  |  | 224 |  |  |  | (404 | ) |  |
December 31, 2019 |  |  |  |  |  |  |  |  |  |
Long-term currency swaps |  |  | 36 |  |  |  | 1 |  |  | Derivative financial assets – net of current portion
|  |  | — |  |  |  | 3 |  |  | Current portion of derivative financial assets
|  |  | — |  |  |  | (25 | ) |  | Derivative financial liabilities – net of current portion
|  |  | — |  |  |  | (24 | ) |  | Current portion of derivative financial liabilities
|  |  | 36 |  |  |  | (45 | ) |  |
The impact of the hedged items on our consolidated statements of financial position as at December 31, 2020 and 2019 are as follows:
|  | 2020 |  |  | 2019 |
|  | Cash flow hedge reserve |  |  | Cost of hedging reserve |  |  | Cash flow hedge reserve |  |  | Cost of hedging reserve |
| (in million pesos) |
PLDT: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
US$300M Term Loan |  |  | (273 | ) |  |  | — |  |  |  | (273 | ) |  |  | — |
US$100M PNB |  |  | (11 | ) |  |  | — |  |  |  | (11 | ) |  |  | — |
US$200M MUFG Bank, Ltd. |  |  | (47 | ) |  |  | 6 |  |  |  | (48 | ) |  |  | 8 |
US$300M Notes 2031 |  |  | (414 | ) |  |  | 64 |  |  |  | — |  |  |  | — |
|  |  | (745 | ) |  |  | 70 |  |  |  | (332 | ) |  |  | 8 |
Smart: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
US$200M Mizuho |  |  | (1 | ) |  |  | — |  |  |  | (12 | ) |  |  | 5 |
US$100M Mizuho |  |  | (18 | ) |  |  | 15 |  |  |  | (22 | ) |  |  | 12 |
|  |  | (19 | ) |  |  | 15 |  |  |  | (34 | ) |  |  | 17 |
The effect of the cash flow hedge on our consolidated income statements and statements of other comprehensive income as at December 31, 2020 and 2019 are as follows:
|  | Total hedging loss recognized in OCI |  |  | Line item in our Consolidated Income Statements
|  | (in million pesos) |  |  |
December 31, 2020 |  |  |  |  |  |
Long-term currency swaps |  |  | (350 | ) |  | Other comprehensive loss
Long-term foreign currency options |  |  | (414 | ) |  | Other comprehensive loss
|  |  | (764 | ) |  |
December 31, 2019 |  |  |  |  |  |
Long-term currency swaps |  |  | (366 | ) |  | Other comprehensive loss
The following table shows our consolidated foreign currency-denominated monetary financial assets and liabilities and their Philippine Peso equivalents as at December 31, 2020 and 2019:
|  | 2020 |  |  | 2019 |
|  | U.S. Dollar |  |  | Php(1) |  |  | U.S. Dollar |  |  | Php(2) |
|  | (in millions) |
Noncurrent Financial Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt instruments at amortized cost |  |  | 24 |  |  |  | 1,153 |  |  |  | — |  |  |  | — |
Derivative financial assets – net of current portion |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |
Other financial assets – net of current portion |  |  | — |  |  |  | 7 |  |  |  | — |  |  |  | 13 |
Total noncurrent financial assets |  |  | 24 |  |  |  | 1,160 |  |  |  | — |  |  |  | 14 |
Current Financial Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 338 |  |  |  | 16,251 |  |  |  | 122 |  |  |  | 6,181 |
Short-term investments |  |  | 10 |  |  |  | 480 |  |  |  | 6 |  |  |  | 285 |
Trade and other receivables – net |  |  | 131 |  |  |  | 6,290 |  |  |  | 777 |  |  |  | 39,472 |
Current portion of derivative financial assets |  |  | 1 |  |  |  | 22 |  |  |  | 1 |  |  |  | 41 |
Current portion of other financial assets |  |  | — |  |  |  | 12 |  |  |  | — |  |  |  | 11 |
Total current financial assets |  |  | 480 |  |  |  | 23,055 |  |  |  | 906 |  |  |  | 45,990 |
Total Financial Assets |  |  | 504 |  |  |  | 24,215 |  |  |  | 906 |  |  |  | 46,004 |
Noncurrent Financial Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing financial liabilities – net of current portion |  |  | 802 |  |  |  | 38,530 |  |  |  | 126 |  |  |  | 6,389 |
Derivative financial liabilities – net of current portion |  |  | 7 |  |  |  | 360 |  |  |  | — |  |  |  | 25 |
Other noncurrent liabilities |  |  | 1 |  |  |  | 22 |  |  |  | — |  |  |  | 15 |
Total noncurrent financial liabilities |  |  | 810 |  |  |  | 38,912 |  |  |  | 126 |  |  |  | 6,429 |
Current Financial Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable |  |  | 670 |  |  |  | 32,201 |  |  |  | 676 |  |  |  | 34,325 |
Accrued expenses and other current liabilities |  |  | 253 |  |  |  | 12,135 |  |  |  | 208 |  |  |  | 10,555 |
Current portion of interest-bearing financial liabilities |  |  | 59 |  |  |  | 2,842 |  |  |  | 210 |  |  |  | 10,687 |
Current portion of derivative financial liabilities |  |  | 4 |  |  |  | 176 |  |  |  | 2 |  |  |  | 88 |
Total current financial liabilities |  |  | 986 |  |  |  | 47,354 |  |  |  | 1,096 |  |  |  | 55,655 |
Total Financial Liabilities |  |  | 1,796 |  |  |  | 86,266 |  |  |  | 1,222 |  |  |  | 62,084 |
| (1) | The exchange rate used to convert the U.S. Dollar amounts into Philippine Peso was Php48.02 to US$1.00, the Philippine Peso-U.S. Dollar exchange rate as quoted through the Bankers Association of the Philippines as at December 31, 2020.
| (2) | The exchange rate used to convert the U.S. Dollar amounts into Philippine Peso was Php50.80 to US$1.00, the Philippine Peso-U.S. Dollar exchange rate as quoted through the Bankers Association of the Philippines as at December 31, 2019.
As at March 24, 2021, the Philippine Peso-U.S. Dollar exchange rate was Php48.68 to US$1.00. Using this exchange rate, our consolidated net foreign currency-denominated financial liabilities would have increased in Philippine Peso terms by Php853 million as at December 31, 2020. Approximately 18% and 9% of our total consolidated debts (net of consolidated debt discount) were denominated in U.S. Dollars as at December 31, 2020 and 2019, respectively. Our consolidated foreign currency-denominated debt increased to Php40,872 million as at December 31, 2020 from Php17,029 million as at December 31, 2019, respectively. See Note 21 – Interest-bearing Financial Liabilities. The aggregate notional amount of our consolidated outstanding long-term principal only-currency swap contracts and long-term foreign currency options were US$224 million and US$36 million as at December 31, 2020 and 2019, respectively. Consequently, the unhedged portion of our consolidated debt amounts was approximately 13% (or 5%, net of our consolidated U.S. Dollar cash balances allocated for debt) and 8% (or 8%, net of our consolidated U.S. Dollar cash balances allocated for debt) as at December 31, 2020 and 2019, respectively. Approximately 16% and 15% of our consolidated revenues were denominated in U.S. Dollars and/or were linked to U.S. Dollars for the years ended December 31, 2020 and 2019, respectively. Approximately 12% and 11% of our consolidated expenses were denominated in U.S. Dollars and/or linked to the U.S. Dollar for the years ended December 31, 2020 and 2019, respectively. In this respect, the higher weighted average exchange rate of the Philippine Peso against the U.S. Dollar increased our revenues and expenses, and consequently, affects our cash flow from operations in Philippine Peso terms. In view of the anticipated continued decline in dollar-denominated/dollar-linked revenues, which provide a natural hedge against our foreign currency exposure, we are progressively refinancing our dollar-denominated debts in Philippine Pesos. The Philippine Peso appreciated by 5.47% against the U.S. Dollar to Php48.02 to US$1.00 as at December 31, 2020 from Php50.80 to US$1.00 as at December 31, 2019. As a result of our consolidated foreign exchange movements, as well as the amount of our consolidated outstanding net foreign currency financial assets and liabilities, we recognized net consolidated foreign exchange gains of Php1,488 million and Php424 million for the years ended December 31, 2020 and 2019, respectively, while we recognized net consolidated foreign exchange loss of Php771 million for the year ended December 31, 2018. Management conducted a survey among our banks to determine the outlook of the Philippine Peso-U.S. Dollar exchange rate until March 31, 2021. Our outlook is that the Philippine Peso-U.S. Dollar exchange rate may weaken/strengthen by 1% as compared to the exchange rate of Php48.02 to US$1.00 as at December 31, 2020. If the Philippine Peso-U.S. Dollar exchange rate had weakened/strengthened by 1% as at December 31, 2020, with all other variables held constant, consolidated profit after tax for the year 2020 and stockholders’ equity as at year end 2020 would have been approximately Php870 million and Php909 million, respectively, lower/higher, mainly as a result of consolidated foreign exchange gains and losses on conversion of U.S. Dollar-denominated net assets/liabilities and mark-to-market valuation of derivative financial instruments. Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Our exposure to the risk of changes in market interest rates relates primarily to our long-term debt obligations with floating interest rates. Our policy is to manage interest cost through a mix of fixed and variable rate debts. We evaluate the fixed to floating ratio of our loans in line with movements of relevant interest rates in the financial markets. Based on our assessment, new financing will be priced either on a fixed or floating rate basis. We enter into interest rate swap agreements in order to manage our exposure to interest rate fluctuations. Further details of the risk management strategy are recognized in our hedge designation documentation. We make use of hedging instruments and structures solely for reducing or managing financial risk associated with our debt obligations and not for trading purposes. The impact of the hedging instruments on our consolidated statements of financial position as at December 31, 2020 and 2019 are as follows:
|  | Notional Amount |  |  | Carrying Amount |  |  | Line item in our Consolidated Statements
|  | (U.S. Dollar) |  |  | (Php) |  |  | of Financial Position
|  | (in million pesos) |  |  |
December 31, 2020 |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | 40 |  |  |  | — |  |  | Derivative financial assets – net of current portion
|  |  | — |  |  |  | 22 |  |  | Current portion of derivative financial assets
|  |  | — |  |  |  | (4 | ) |  | Derivative financial liabilities – net of current portion
|  |  | — |  |  |  | (44 | ) |  | Current portion of derivative financial liabilities
|  |  | 40 |  |  |  | (26 | ) |  |
December 31, 2019 |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | 233 |  |  |  | 1 |  |  | Derivative financial assets – net of current portion
|  |  | — |  |  |  | 31 |  |  | Current portion of derivative financial assets
|  |  | — |  |  |  | (1 | ) |  | Derivative financial liabilities – net of current portion
|  |  | — |  |  |  | (31 | ) |  | Current portion of derivative financial liabilities
|  |  | 233 |  |  |  | — |  |  |
The impact of the hedged items on our consolidated statements of financial position as at December 31, 2020 and 2019 are as follows:
|  | 2020 |  |  | 2019 |
|  | Cash flow hedge reserve |  |  | Cost of hedging reserve |  |  | Cash flow hedge reserve |  |  | Cost of hedging reserve |
| (in million pesos) |
PLDT: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
US$100M PNB |  |  | — |  |  |  | — |  |  |  | (6 | ) |  |  | — |
US$50M MBTC |  |  | — |  |  |  | — |  |  |  | (4 | ) |  |  | — |
US$200M MUFG Bank, Ltd. |  |  | (16 | ) |  |  | — |  |  |  | (1 | ) |  |  | — |
|  |  | (16 | ) |  |  | — |  |  |  | (11 | ) |  |  | — |
Smart: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2014 BTMU US$100M |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | — |
2014 Mizuho US$50M |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | — |
2015 Mizuho US$200M |  |  | (2 | ) |  |  | — |  |  |  | (36 | ) |  |  | — |
2015 Mizuho US$100M |  |  | (6 | ) |  |  | — |  |  |  | (19 | ) |  |  | — |
|  |  | (8 | ) |  |  | — |  |  |  | (57 | ) |  |  | — |
The effect of the cash flow hedge on our consolidated income statements and statements of other comprehensive income as at December 31, 2020 and 2019 are as follows:
|  | Total hedging loss recognized in OCI |  |  | Line item in our Consolidated Income Statements
|  | (in million pesos) |  |  |
December 31, 2020 |  |  |  |  |  |
Interest rate swaps |  |  | (24 | ) |  | Other comprehensive loss
December 31, 2019 |  |  |  |  |  |
Interest rate swaps |  |  | (68 | ) |  | Other comprehensive loss
The following tables set out the carrying amounts, by maturity, of our financial instruments that are expected to have exposure on interest rate risk as at December 31, 2020 and 2019. Financial instruments that are not subject to interest rate risk were not included in the table. As at December 31, 2020
|  | In U.S. Dollars |  |  |  |  |  |  | Discount/ |  |  |  |  |  |  | Fair Value |
|  | Below 1 year |  |  | 1-2 years |  |  | 2-3 years |  |  | 3-5 years |  |  | Over 5 years |  |  | Total |  |  | In Php |  |  | Debt Issuance Cost In Php |  |  | Carrying Value In Php |  |  | In U.S. Dollar |  |  | In Php |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (in millions) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt Instruments at Amortized Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Dollar |  |  | — |  |  |  | 24 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 24 |  |  |  | 1,153 |  |  |  | — |  |  |  | 1,153 |  |  |  | 24 |  |  |  | 1,163 |
Interest rate |  |  | — |  |  | 0.8962% to 2.0000% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Cash in Bank |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Dollar |  |  | 49 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 49 |  |  |  | 2,337 |  |  |  | — |  |  |  | 2,337 |  |  |  | 49 |  |  |  | 2,337 |
Interest rate |  | 0.0100% to 0.5000% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Philippine Peso |  |  | 103 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 103 |  |  |  | 4,940 |  |  |  | — |  |  |  | 4,940 |  |  |  | 103 |  |  |  | 4,940 |
Interest rate |  | 0.0500% to 2.5000% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Temporary Cash Investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Dollar |  |  | 254 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 254 |  |  |  | 12,222 |  |  |  | — |  |  |  | 12,222 |  |  |  | 254 |  |  |  | 12,222 |
Interest rate |  | 0.0200% to 2.5000% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Philippine Peso |  |  | 385 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 385 |  |  |  | 18,490 |  |  |  | — |  |  |  | 18,490 |  |  |  | 385 |  |  |  | 18,490 |
Interest rate |  | 0.3200% to 1.6000% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Short-term Investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Dollar |  |  | 10 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10 |  |  |  | 480 |  |  |  | — |  |  |  | 480 |  |  |  | 10 |  |  |  | 480 |
Interest rate |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Philippine Peso |  |  | 11 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 11 |  |  |  | 509 |  |  |  | — |  |  |  | 509 |  |  |  | 11 |  |  |  | 509 |
Interest rate |  | 2.0000% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  | 812 |  |  |  | 24 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 836 |  |  |  | 40,131 |  |  |  | — |  |  |  | 40,131 |  |  |  | 836 |  |  |  | 40,141 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term Debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed Rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Dollar Notes |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 600 |  |  |  | 600 |  |  |  | 28,813 |  |  |  | 634 |  |  |  | 28,179 |  |  |  | 632 |  |  |  | 30,336 |
Interest rate |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  | 2.5000% to 3.4500% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
U.S. Dollar Fixed Loans |  |  | — |  |  |  | 11 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 11 |  |  |  | 540 |  |  |  | — |  |  |  | 540 |  |  |  | 11 |  |  |  | 545 |
Interest rate |  |  | — |  |  | 2.8850% |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Philippine Peso |  |  | 258 |  |  |  | 313 |  |  |  | 525 |  |  |  | 657 |  |  |  | 1,612 |  |  |  | 3,365 |  |  |  | 161,597 |  |  |  | 457 |  |  |  | 161,040 |  |  |  | 3,489 |  |  |  | 167,520 |
Interest rate |  |  | 5.2250 | % |  | 3.9000% to 6.7339% |  |  | 3.9000% to 6.7339% |  |  | 3.9500% to 6.7339% |  |  | 4.2500% to 6.7339% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Variable Rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Dollar Loans |  |  | — |  |  |  | 93 |  |  |  | 39 |  |  |  | 53 |  |  |  | 70 |  |  |  | 255 |  |  |  | 12,222 |  |  |  | 69 |  |  |  | 12,153 |  |  |  | 255 |  |  |  | 12,222 |
Interest rate |  |  | — |  |  | 0.7900% to 1.0500% over LIBOR |  |  | 1.0500% over LIBOR |  |  | 1.0500% over LIBOR |  |  | 1.0500% over LIBOR |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Philippine Peso |  |  | — |  |  |  | 9 |  |  |  | 4 |  |  |  | 77 |  |  |  | 344 |  |  |  | 434 |  |  |  | 20,855 |  |  |  | 101 |  |  |  | 20,754 |  |  |  | 434 |  |  |  | 20,855 |
Interest rate |  |  | — |  |  | 0.5000% to 0.7500% over PHP BVAL (floor rate 4.5000%) |  |  | 0.5000% to 0.7500% over PHP BVAL (floor rate 4.5000%) |  |  | 0.5000% to 0.7500% over PHP BVAL (floor rate 4.5000%) |  |  | 0.6000% to 0.7500% over PHP BVAL (floor rate 4.5000%) |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  | 258 |  |  |  | 426 |  |  |  | 568 |  |  |  | 787 |  |  |  | 2,626 |  |  |  | 4,665 |  |  |  | 224,027 |  |  |  | 1,262 |  |  |  | 222,665 |  |  |  | 4,821 |  |  |  | 231,478 |
As at December 31, 2019
|  | In U.S. Dollars |  |  |  |  |  |  | Discount/ |  |  |  |  |  |  | Fair Value |
|  | Below 1 year |  |  | 1-2 years |  |  | 2-3 years |  |  | 3-5 years |  |  | Over 5 years |  |  | Total |  |  | In Php |  |  | Debt Issuance Cost In Php |  |  | Carrying Value In Php |  |  | In U.S. Dollar |  |  | In Php |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (in millions) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt Instruments at Amortized Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Philippine Peso |  |  | 3 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3 |  |  |  | 150 |  |  |  | — |  |  |  | 150 |  |  |  | 3 |  |  |  | 150 |
Interest rate |  | 4.8371% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Cash in Bank |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Dollar |  |  | 31 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 31 |  |  |  | 1,586 |  |  |  | — |  |  |  | 1,586 |  |  |  | 31 |  |  |  | 1,586 |
Interest rate |  | 0.0100% to 1.0000% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Philippine Peso |  |  | 83 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 83 |  |  |  | 4,228 |  |  |  | — |  |  |  | 4,228 |  |  |  | 83 |  |  |  | 4,228 |
Interest rate |  | 0.0500% to 1.2500% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other Currencies |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2 |  |  |  | 92 |  |  |  | — |  |  |  | 92 |  |  |  | 2 |  |  |  | 92 |
Interest rate |  | 0.1000% to 0.5000% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Temporary Cash Investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Dollar |  |  | 72 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 72 |  |  |  | 3,645 |  |  |  | — |  |  |  | 3,645 |  |  |  | 72 |  |  |  | 3,645 |
Interest rate |  | 0.7000% to 4.7500% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Philippine Peso |  |  | 276 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 276 |  |  |  | 14,018 |  |  |  | — |  |  |  | 14,018 |  |  |  | 276 |  |  |  | 14,018 |
Interest rate |  | 0.1250% to 5.0000% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Short-term Investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Philippine Peso |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 29 |  |  |  | — |  |  |  | 29 |  |  |  | 1 |  |  |  | 29 |
Interest rate |  | 1.5000% to 3.0000% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other Currencies |  |  | 6 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6 |  |  |  | 285 |  |  |  | — |  |  |  | 285 |  |  |  | 6 |  |  |  | 285 |
Interest rate |  | 0.0000% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  | 474 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 474 |  |  |  | 24,033 |  |  |  | — |  |  |  | 24,033 |  |  |  | 474 |  |  |  | 24,033 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term Debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed Rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Dollar Fixed Loans |  |  | — |  |  |  | 15 |  |  |  | 4 |  |  |  | — |  |  |  | — |  |  |  | 19 |  |  |  | 952 |  |  |  | — |  |  |  | 952 |  |  |  | 19 |  |  |  | 945 |
Interest rate |  |  | — |  |  |  | 2.8850 | % |  | 2.8850% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Philippine Peso |  |  | 42 |  |  |  | 376 |  |  |  | 302 |  |  |  | 673 |  |  |  | 1,697 |  |  |  | 3,090 |  |  |  | 156,996 |  |  |  | 408 |  |  |  | 156,588 |  |  |  | 3,024 |  |  |  | 153,644 |
Interest rate |  | 4.4850% to 5.5000% |  |  | 3.9000% to 6.7339% |  |  | 3.9000% to 6.7339% |  |  | 3.9000% to 6.7339% |  |  | 4.2500% to 6.7339% |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Variable Rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Dollar Loans |  |  | 165 |  |  |  | 76 |  |  |  | 26 |  |  |  | 50 |  |  |  | — |  |  |  | 317 |  |  |  | 16,124 |  |  |  | 47 |  |  |  | 16,077 |  |  |  | 317 |  |  |  | 16,123 |
Interest rate |  | 0.7900% to 1.4500% over LIBOR |  |  | 0.7900% to 0.9500% over LIBOR |  |  | 0.7900% to 0.9500% over LIBOR |  |  | 1.0500% over LIBOR |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Philippine Peso |  |  | 93 |  |  |  | 69 |  |  |  | 3 |  |  |  | 70 |  |  |  | 139 |  |  |  | 374 |  |  |  | 18,975 |  |  |  | 36 |  |  |  | 18,939 |  |  |  | 374 |  |  |  | 18,975 |
Interest rate |  | 1.0000% over PHP BVAL |  |  | 0.5000% to 1.0000% over PHP BVAL |  |  | 0.5000% to 0.6000% over PHP BVAL |  |  | 0.5000% to 0.6000% over PHP BVAL |  |  | 0.6000% over PHP BVAL |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  | 300 |  |  |  | 536 |  |  |  | 335 |  |  |  | 793 |  |  |  | 1,836 |  |  |  | 3,800 |  |  |  | 193,047 |  |  |  | 491 |  |  |  | 192,556 |  |  |  | 3,734 |  |  |  | 189,687 |
Fixed rate financial instruments are subject to fair value interest rate risk while floating rate financial instruments are subject to cash flow interest rate risk. Repricing of floating rate financial instruments is mostly done on intervals of three months or six months. Interest on fixed rate financial instruments is fixed until maturity of the particular instrument. Approximately 15% and 18% of our consolidated debts were variable rate debts as at December 31, 2020 and 2019, respectively. Our consolidated variable rate debt decreased to Php33,077 million as at December 31, 2020 from Php35,098 million as at December 31, 2019. Considering the aggregate notional amount of our consolidated outstanding long-term interest rate swap contracts of US$40 million and US$233 million as at December 31, 2020 and 2019, respectively, approximately 86% and 88% of our consolidated debts were fixed as at December 31, 2020 and 2019, respectively. Management conducted a survey among our banks to determine the outlook of the U.S. Dollar and Philippine Peso interest rates until March 31, 2021. Our outlook is that the U.S. Dollar and Philippine Peso interest rates may move 5 basis points, or bps, and 15 bps higher/lower, respectively, as compared to levels as at December 31, 2020. If the U.S. Dollar interest rates had been 5 bps higher/lower as compared to market levels as at December 31, 2020, with all other variables held constant, consolidated profit after tax for the year 2020 and stockholders’ equity as at year end 2020 would have been approximately Php1 million and Php6 million, respectively, lower/higher, mainly as a result of higher/lower interest expense on floating rate borrowings and loss/gain on derivative transactions. If the Philippine Peso interest rates had been 15 bps higher/lower as compared to market levels as at December 31, 2020, with all other variables held constant, consolidated profit after tax for the year 2020 and stockholders’ equity as at year end 2020 would have been approximately Php1.9 million and Php34 million, respectively, lower/higher, mainly as a result of higher/lower interest expense on floating rate borrowings and loss/gain on derivative transactions. Credit Risk Credit risk is the risk that we will incur a loss arising from our customers, clients or counterparties that fail to discharge their contracted obligations. We manage and control credit risk by setting limits on the amount of risk we are willing to accept for individual counterparties and by monitoring exposures in relation to such limits. We trade only with recognized and creditworthy third parties. It is our policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an on-going basis to reduce our exposure to bad debts. We established a credit quality review process to provide regular identification of changes in the creditworthiness of counterparties. Counterparty limits are established and reviewed periodically based on latest available financial data on our counterparties’ credit ratings, capitalization, asset quality and liquidity. Our credit quality review process allows us to assess the potential loss as a result of the risks to which we are exposed and allow us to take corrective actions. Maximum exposure to credit risk of financial assets not subject to impairment The gross carrying amount of financial assets not subject to impairment also represents our maximum exposure to credit risk as at December 31, 2020 and 2019 are as follows:
|  | 2020 |  |  | 2019 |
|  | (in million pesos) |
Financial assets at fair value through profit or loss (Note 12) |  |  | 380 |  |  |  | 3,369 |
Derivative financial assets – net of current portion |  |  | — |  |  |  | 1 |
Current portion of derivative financial assets |  |  | 22 |  |  |  | 41 |
Total |  |  | 402 |  |  |  | 3,411 |
Maximum exposure to credit risk of financial assets subject to impairment The table below shows the maximum exposure to credit risk for the components of our consolidated statements of financial position, including derivative financial instruments as at December 31, 2020 and 2019. The maximum exposure is shown gross before both the effect of mitigation through use of master netting and collateral arrangements. The extent to which collateral and other credit enhancements mitigate the maximum exposure to credit risk is described in the footnotes to the table. For financial assets recognized on our consolidated statements of financial position as at December 31, 2020 and 2019, the gross exposure to credit risk equal their carrying amount. For financial guarantees granted, the maximum exposure to credit risk is the maximum amount that we would have to pay if the guarantees are called upon. For loan commitments and other credit related commitments that are irrevocable over the life of the respective facilities, the maximum exposure to credit risk is the full amount of the committed facilities.
|  | December 31, 2020 |
|  | Stage 1 12-Month ECL |  |  | Stage 2 Lifetime ECL |  |  | Stage 3 Lifetime ECL |  |  | Total |
|  | (in million pesos) |
High grade |  |  | 44,618 |  |  |  | 8,239 |  |  |  | — |  |  |  | 52,857 |
Standard grade |  |  | 563 |  |  |  | 4,443 |  |  |  | — |  |  |  | 5,006 |
Substandard grade |  |  | — |  |  |  | 9,371 |  |  |  | — |  |  |  | 9,371 |
Default |  |  | 574 |  |  |  | 3,960 |  |  |  | 12,291 |  |  |  | 16,825 |
Gross carrying amount |  |  | 45,755 |  |  |  | 26,013 |  |  |  | 12,291 |  |  |  | 84,059 |
Less allowance |  |  | 574 |  |  |  | 3,960 |  |  |  | 12,291 |  |  |  | 16,825 |
Carrying amount |  |  | 45,181 |  |  |  | 22,053 |  |  |  | — |  |  |  | 67,234 |
|  | December 31, 2019 |
|  | Stage 1 12-Month ECL |  |  | Stage 2 Lifetime ECL |  |  | Stage 3 Lifetime ECL |  |  | Total |
|  | (in million pesos) |
High grade |  |  | 29,241 |  |  |  | 9,228 |  |  |  | — |  |  |  | 38,469 |
Standard grade |  |  | 1,710 |  |  |  | 6,224 |  |  |  | — |  |  |  | 7,934 |
Substandard grade |  |  | 7 |  |  |  | 6,984 |  |  |  | — |  |  |  | 6,991 |
Default |  |  | 298 |  |  |  | 1,763 |  |  |  | 15,141 |  |  |  | 17,202 |
Gross carrying amount |  |  | 31,256 |  |  |  | 24,199 |  |  |  | 15,141 |  |  |  | 70,596 |
Less allowance |  |  | 298 |  |  |  | 1,763 |  |  |  | 15,141 |  |  |  | 17,202 |
Carrying amount |  |  | 30,958 |  |  |  | 22,436 |  |  |  | — |  |  |  | 53,394 |
Maximum exposure to credit risk after collateral held or other credit enhancements Collateral held as security for financial assets depends on the nature of the instrument. Debt investment securities are generally unsecured. Estimates of fair value are based on the value of collateral assessed at the time of borrowing and are regularly updated according to internal lending policies and regulatory guidelines. Generally, collateral is not held over loans and advances to us except for reverse repurchase agreements. Collateral usually is not held against investment securities, and no such collateral was held as at December 31, 2020 and 2019. Our policies regarding obtaining collateral have not significantly changed during the reporting period and there has been no significant change in the overall quality of the collateral held by us during the year. We have not identified significant risk concentrations arising from the nature, type or location of collateral and other credit enhancements held against our credit exposures. An analysis of the maximum exposure to credit risk for the components of our consolidated statements of financial position, including derivative financial instruments as at December 31, 2020 and 2019:
|  | December 31, 2020 |
|  | Gross Maximum Exposure |  |  | Collateral and Other Credit Enhancements* |  |  | Net Maximum Exposure |
|  | (in million pesos) |
Cash and cash equivalents |  |  | 40,237 |  |  |  | 173 |  |  |  | 40,064 |
Financial instruments at amortized cost: |  |  | 26,829 |  |  |  | 355 |  |  |  | 26,474 |
Other financial assets |  |  | 3,115 |  |  |  | — |  |  |  | 3,115 |
Debt instruments at amortized cost |  |  | 1,153 |  |  |  | — |  |  |  | 1,153 |
Short-term investments |  |  | 508 |  |  |  | — |  |  |  | 508 |
Retail subscribers |  |  | 7,152 |  |  |  | 18 |  |  |  | 7,134 |
Corporate subscribers |  |  | 8,460 |  |  |  | 337 |  |  |  | 8,123 |
Foreign administrations |  |  | 1,284 |  |  |  | — |  |  |  | 1,284 |
Domestic carriers |  |  | 165 |  |  |  | — |  |  |  | 165 |
Dealers, agents and others |  |  | 4,992 |  |  |  | — |  |  |  | 4,992 |
Financial instruments at FVPL: |  |  | 7,855 |  |  |  | — |  |  |  | 7,855 |
Financial assets at FVPL |  |  | 380 |  |  |  | — |  |  |  | 380 |
Short-term investments |  |  | 481 |  |  |  | — |  |  |  | 481 |
Other financial assets |  |  | 6,972 |  |  |  | — |  |  |  | 6,972 |
Interest rate swap |  |  | 22 |  |  |  | — |  |  |  | 22 |
Financial instruments at FVOCI: |  |  | 168 |  |  |  | — |  |  |  | 168 |
Financial assets at FVOCI |  |  | 168 |  |  |  | — |  |  |  | 168 |
Total |  |  | 75,089 |  |  |  | 528 |  |  |  | 74,561 |
| * | Includes bank insurance, security deposits and customer deposits. We have no collateral held as at December 31, 2020.
|  | December 31, 2019 |
|  | Gross Maximum Exposure |  |  | Collateral and Other Credit Enhancements* |  |  | Net Maximum Exposure |
|  | (in million pesos) |
Cash and cash equivalents |  |  | 24,369 |  |  |  | 184 |  |  |  | 24,185 |
Financial instruments at amortized cost: |  |  | 26,106 |  |  |  | 377 |  |  |  | 25,729 |
Other financial assets |  |  | 3,206 |  |  |  | — |  |  |  | 3,206 |
Debt instruments at amortized cost |  |  | 150 |  |  |  | — |  |  |  | 150 |
Short-term investments |  |  | 314 |  |  |  | — |  |  |  | 314 |
Retail subscribers |  |  | 6,486 |  |  |  | 46 |  |  |  | 6,440 |
Corporate subscribers |  |  | 8,403 |  |  |  | 331 |  |  |  | 8,072 |
Foreign administrations |  |  | 1,519 |  |  |  | — |  |  |  | 1,519 |
Domestic carriers |  |  | 799 |  |  |  | — |  |  |  | 799 |
Dealers, agents and others |  |  | 5,229 |  |  |  | — |  |  |  | 5,229 |
Financial instruments at FVPL: |  |  | 10,277 |  |  |  | — |  |  |  | 10,277 |
Financial assets at FVPL |  |  | 3,369 |  |  |  | — |  |  |  | 3,369 |
Other financial assets |  |  | 6,866 |  |  |  | — |  |  |  | 6,866 |
Interest rate swap |  |  | 31 |  |  |  | — |  |  |  | 31 |
Forward foreign exchange contracts |  |  | 8 |  |  |  | — |  |  |  | 8 |
Currency swap |  |  | 2 |  |  |  | — |  |  |  | 2 |
Long-term currency swap |  |  | 1 |  |  |  | — |  |  |  | 1 |
Financial instruments at FVOCI: |  |  | 2,919 |  |  |  | — |  |  |  | 2,919 |
Financial assets at FVOCI |  |  | 2,919 |  |  |  | — |  |  |  | 2,919 |
Total |  |  | 63,671 |  |  |  | 561 |  |  |  | 63,110 |
| * | Includes bank insurance, security deposits and customer deposits. We have no collateral held as at December 31, 2019.
The table below provides information regarding the credit quality by class of our financial assets according to our credit ratings of counterparties as at December 31, 2020 and 2019:
|  |  |  |  |  | Neither past due nor credit impaired |  |  | Past due but not |  |  |  |  |
|  | Total |  |  | Class A(1) |  |  | Class B(2) |  |  | credit impaired |  |  | Impaired |
|  | (in million pesos) |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 40,237 |  |  |  | 39,956 |  |  |  | 281 |  |  |  | — |  |  |  | — |
Financial instruments at amortized cost: |  |  | 43,654 |  |  |  | 12,733 |  |  |  | 4,725 |  |  |  | 9,371 |  |  |  | 16,825 |
Other financial assets |  |  | 3,689 |  |  |  | 2,833 |  |  |  | 282 |  |  |  | — |  |  |  | 574 |
Debt instruments at amortized cost |  |  | 1,153 |  |  |  | 1,153 |  |  |  | — |  |  |  | — |  |  |  | — |
Short-term investments |  |  | 508 |  |  |  | 508 |  |  |  | — |  |  |  | — |  |  |  | — |
Retail subscribers |  |  | 17,142 |  |  |  | 3,263 |  |  |  | 2,348 |  |  |  | 1,541 |  |  |  | 9,990 |
Corporate subscribers |  |  | 13,318 |  |  |  | 3,358 |  |  |  | 228 |  |  |  | 4,874 |  |  |  | 4,858 |
Foreign administrations |  |  | 1,520 |  |  |  | 246 |  |  |  | 567 |  |  |  | 471 |  |  |  | 236 |
Domestic carriers |  |  | 226 |  |  |  | 14 |  |  |  | 38 |  |  |  | 113 |  |  |  | 61 |
Dealers, agents and others |  |  | 6,098 |  |  |  | 1,358 |  |  |  | 1,262 |  |  |  | 2,372 |  |  |  | 1,106 |
Financial instruments at FVPL: |  |  | 7,855 |  |  |  | 7,741 |  |  |  | 114 |  |  |  | — |  |  |  | — |
Financial assets at FVPL |  |  | 380 |  |  |  | 266 |  |  |  | 114 |  |  |  | — |  |  |  | — |
Short-term investments |  |  | 481 |  |  |  | 481 |  |  |  | — |  |  |  | — |  |  |  | — |
Other financial assets |  |  | 6,972 |  |  |  | 6,972 |  |  |  | — |  |  |  | — |  |  |  | — |
Interest rate swap |  |  | 22 |  |  |  | 22 |  |  |  | — |  |  |  | — |  |  |  | — |
Financial instruments at FVOCI: |  |  | 168 |  |  |  | 168 |  |  |  | — |  |  |  | — |  |  |  | — |
Financial assets at FVOCI |  |  | 168 |  |  |  | 168 |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | 91,914 |  |  |  | 60,598 |  |  |  | 5,120 |  |  |  | 9,371 |  |  |  | 16,825 |
| (1) | This includes low risk and good paying customer accounts with no history of account treatment for a defined period and no overdue accounts as at report date; and deposits or placements to counterparties with good credit rating or bank standing financial review.
| (2) | This includes medium risk and average paying customer accounts with no overdue accounts as at report date, and new customer accounts for which sufficient credit history has not been established; and deposits or placements to counterparties not classified as Class A.
|  |  |  |  |  | Neither past due nor credit impaired |  |  | Past due but not |  |  |  |  |
|  | Total |  |  | Class A(1) |  |  | Class B(2) |  |  | credit impaired |  |  | Impaired |
|  | (in million pesos) |
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 24,369 |  |  |  | 24,111 |  |  |  | 258 |  |  |  | — |  |  |  | — |
Financial instruments at amortized cost: |  |  | 43,308 |  |  |  | 11,439 |  |  |  | 7,676 |  |  |  | 6,991 |  |  |  | 17,202 |
Other financial assets |  |  | 3,504 |  |  |  | 1,747 |  |  |  | 1,452 |  |  |  | 7 |  |  |  | 298 |
Debt instruments at amortized cost |  |  | 150 |  |  |  | 150 |  |  |  | — |  |  |  | — |  |  |  | — |
Short-term investments |  |  | 314 |  |  |  | 314 |  |  |  | — |  |  |  | — |  |  |  | — |
Retail subscribers |  |  | 17,178 |  |  |  | 3,280 |  |  |  | 1,634 |  |  |  | 1,572 |  |  |  | 10,692 |
Corporate subscribers |  |  | 13,005 |  |  |  | 3,652 |  |  |  | 2,041 |  |  |  | 2,710 |  |  |  | 4,602 |
Foreign administrations |  |  | 1,896 |  |  |  | 460 |  |  |  | 414 |  |  |  | 645 |  |  |  | 377 |
Domestic carriers |  |  | 889 |  |  |  | 374 |  |  |  | 40 |  |  |  | 385 |  |  |  | 90 |
Dealers, agents and others |  |  | 6,372 |  |  |  | 1,462 |  |  |  | 2,095 |  |  |  | 1,672 |  |  |  | 1,143 |
Financial instruments at FVPL: |  |  | 10,277 |  |  |  | 10,160 |  |  |  | 117 |  |  |  | — |  |  |  | — |
Financial assets at FVPL |  |  | 3,369 |  |  |  | 3,252 |  |  |  | 117 |  |  |  | — |  |  |  | — |
Other financial assets |  |  | 6,866 |  |  |  | 6,866 |  |  |  | — |  |  |  | — |  |  |  | — |
Interest rate swap |  |  | 31 |  |  |  | 31 |  |  |  | — |  |  |  | — |  |  |  | — |
Forward foreign exchange contracts |  |  | 8 |  |  |  | 8 |  |  |  | — |  |  |  | — |  |  |  | — |
Currency swap |  |  | 2 |  |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | — |
Long-term currency swap |  |  | 1 |  |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | — |
Financial instruments at FVOCI: |  |  | 2,919 |  |  |  | 2,919 |  |  |  | — |  |  |  | — |  |  |  | — |
Financial assets at FVOCI |  |  | 2,919 |  |  |  | 2,919 |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | 80,873 |  |  |  | 48,629 |  |  |  | 8,051 |  |  |  | 6,991 |  |  |  | 17,202 |
| (1) | This includes low risk and good paying customer accounts with no history of account treatment for a defined period and no overdue accounts as at report date; and deposits or placements to counterparties with good credit rating or bank standing financial review.
| (2) | This includes medium risk and average paying customer accounts with no overdue accounts as at report date, and new customer accounts for which sufficient credit history has not been established; and deposits or placements to counterparties not classified as Class A.
The aging analysis of past due but not impaired class of financial assets as at December 31, 2020 and 2019 are as follows:
|  |  |  |  |  |  |  |  |  | Past due but not credit impaired |  |  |  |  |
|  | Total |  |  | Neither past due nor credit impaired |  |  | 1-60 days |  |  | 61-90 days |  |  | Over 91 days |  |  | Impaired |
|  | (in million pesos) |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 40,237 |  |  |  | 40,237 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Financial instruments at amortized cost: |  |  | 43,654 |  |  |  | 17,458 |  |  |  | 3,090 |  |  |  | 1,139 |  |  |  | 5,142 |  |  |  | 16,825 |
Other financial assets |  |  | 3,689 |  |  |  | 3,115 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 574 |
Debt instruments at amortized cost |  |  | 1,153 |  |  |  | 1,153 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Short-term investments |  |  | 508 |  |  |  | 508 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Retail subscribers |  |  | 17,142 |  |  |  | 5,611 |  |  |  | 884 |  |  |  | 348 |  |  |  | 309 |  |  |  | 9,990 |
Corporate subscribers |  |  | 13,318 |  |  |  | 3,586 |  |  |  | 1,606 |  |  |  | 559 |  |  |  | 2,709 |  |  |  | 4,858 |
Foreign administrations |  |  | 1,520 |  |  |  | 813 |  |  |  | 144 |  |  |  | 70 |  |  |  | 257 |  |  |  | 236 |
Domestic carriers |  |  | 226 |  |  |  | 52 |  |  |  | 31 |  |  |  | 10 |  |  |  | 72 |  |  |  | 61 |
Dealers, agents and others |  |  | 6,098 |  |  |  | 2,620 |  |  |  | 425 |  |  |  | 152 |  |  |  | 1,795 |  |  |  | 1,106 |
Financial instruments at FVPL: |  |  | 7,855 |  |  |  | 7,855 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Financial assets at FVPL |  |  | 380 |  |  |  | 380 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Short-term investments |  |  | 481 |  |  |  | 481 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other financial assets |  |  | 6,972 |  |  |  | 6,972 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Interest rate swap |  |  | 22 |  |  |  | 22 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Financial instruments at FVOCI: |  |  | 168 |  |  |  | 168 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Financial assets at FVOCI |  |  | 168 |  |  |  | 168 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | 91,914 |  |  |  | 65,718 |  |  |  | 3,090 |  |  |  | 1,139 |  |  |  | 5,142 |  |  |  | 16,825 |
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 24,369 |  |  |  | 24,369 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Financial instruments at amortized cost: |  |  | 43,308 |  |  |  | 19,115 |  |  |  | 2,006 |  |  |  | 1,247 |  |  |  | 3,738 |  |  |  | 17,202 |
Other financial assets |  |  | 3,504 |  |  |  | 3,199 |  |  |  | — |  |  |  | — |  |  |  | 7 |  |  |  | 298 |
Debt instruments at amortized cost |  |  | 150 |  |  |  | 150 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Short-term investments |  |  | 314 |  |  |  | 314 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Retail subscribers |  |  | 17,178 |  |  |  | 4,914 |  |  |  | 994 |  |  |  | 150 |  |  |  | 428 |  |  |  | 10,692 |
Corporate subscribers |  |  | 13,005 |  |  |  | 5,693 |  |  |  | 705 |  |  |  | 770 |  |  |  | 1,220 |  |  |  | 4,617 |
Foreign administrations |  |  | 1,896 |  |  |  | 874 |  |  |  | 41 |  |  |  | 26 |  |  |  | 578 |  |  |  | 377 |
Domestic carriers |  |  | 889 |  |  |  | 414 |  |  |  | 103 |  |  |  | 240 |  |  |  | 43 |  |  |  | 89 |
Dealers, agents and others |  |  | 6,372 |  |  |  | 3,557 |  |  |  | 163 |  |  |  | 61 |  |  |  | 1,462 |  |  |  | 1,129 |
Financial instruments at FVPL: |  |  | 10,277 |  |  |  | 10,277 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Financial assets at FVPL |  |  | 3,369 |  |  |  | 3,369 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other financial assets |  |  | 6,866 |  |  |  | 6,866 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Interest rate swap |  |  | 31 |  |  |  | 31 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Forward foreign exchange contracts |  |  | 8 |  |  |  | 8 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Currency swap |  |  | 2 |  |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Long-term currency swap |  |  | 1 |  |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Financial instruments at FVOCI: |  |  | 2,919 |  |  |  | 2,919 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Financial assets at FVOCI |  |  | 2,919 |  |  |  | 2,919 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | 80,873 |  |  |  | 56,680 |  |  |  | 2,006 |  |  |  | 1,247 |  |  |  | 3,738 |  |  |  | 17,202 |
Capital Management Risk We aim to achieve an optimal capital structure in pursuit of our business objectives which include maintaining healthy capital ratios and strong credit ratings, and maximizing shareholder value. Our approach to capital management focuses on balancing the allocation of cash and the incurrence of debt as we seek new investment opportunities for new businesses and growth areas. On August 5, 2014, the PLDT Board of Directors approved an amendment to our dividend policy, increasing the dividend payout rate to 75% from 70% of our core EPS as regular dividends. However, in view of our elevated capital expenditures to build-out a robust, superior network to support the continued growth of data traffic, plans to invest in new adjacent businesses that will complement the current business and provide future sources of profits and dividends, and management of our cash and gearing levels, the PLDT Board of Directors approved on August 2, 2016, the amendment of our dividend policy, reducing the regular dividend payout to 60% of core EPS. In declaring dividends, we take into consideration the interest of our shareholders, as well as our working capital, capital expenditures and debt servicing requirements. The retention of earnings may be necessary to meet the funding requirements of our business expansion and development programs. As part of the dividend policy, in the event no investment opportunities arise, we may consider the option of returning additional cash to our shareholders in the form of special dividends or share buybacks. Philippine corporate regulations prescribe, however, that we can only pay out dividends or make capital distribution up to the amount of our unrestricted retained earnings. Some of our debt instruments contain covenants that impose maximum leverage ratios. In addition, our credit ratings from the international credit ratings agencies are based on our ability to remain within certain leverage ratios. No changes were made in our objectives, policies or processes for managing capital during the years ended December 31, 2020, 2019 and 2018.

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