METHANEX CORP
For the period ended Dec 31, 2023. Filed Mar 8, 2024.
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The yearly report of certain Canadian companies, filed under a joint US and Canadian system. It is the main yearly account these companies give US investors, largely as filed in Canada.
FY2023 · Filed Mar 8, 2024
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EX-99.3 · Fair value - Level 2 instruments
Fair value - Level 2 instruments
The table below shows the nominal cash outflows for derivative hedging instruments including natural gas forward contracts and forward exchange contracts, excluding credit risk adjustments, based upon contracted settlement dates. The amounts reflect the maturity profile of the hedging instruments and are subject to change based on the prevailing market rate at each of the future settlement dates. Financial asset derivative positions, if any, are held with investment-grade counterparties and therefore the settlement day risk exposure is considered to be negligible.
| As at | Dec 312023 | Dec 312022 |
|---|---|---|
| Within one year | $65,034 | $2,050 |
| 1-3 years | 17,771 | 7,132 |
| 3-5 years | 5,537 | — |
| More than 5 years | 11,378 | — |
| $99,720 | $9,182 |
The fair value of the Company’s derivative financial instruments as disclosed above are determined based on Bloomberg quoted market prices, which are adjusted for credit risk.
The Company is exposed to credit-related losses in the event of non-performance by counterparties to derivative financial instruments but does not expect any counterparties to fail to meet their obligations. The Company deals with only highly rated investment-grade counterparties. The Company is exposed to credit risk when there is a positive fair value of derivative financial instruments at a reporting date. The maximum amount that would be at risk if the counterparties to derivative financial instruments with positive fair values failed completely to perform under the contracts was $121.1 million as at December 31, 2023 (2022 - $322.7 million).
The carrying values of the Company’s financial instruments approximate their fair values, except as follows:
| As at | December 31, 2023 | December 31, 2022 | ||
|---|---|---|---|---|
| Carryingvalue | Fairvalue | Carryingvalue | Fairvalue | |
| Long-term debt excluding deferred financing fees | $2,156,534 | $2,063,661 | $2,168,585 | $1,953,932 |
Long-term debt consists of limited recourse debt facilities and unsecured notes. There is no publicly traded market for the limited recourse debt facilities. The fair value of the limited recourse debt facilities as disclosed on a recurring basis and categorized as Level 2 within the fair value hierarchy is estimated by reference to current market rates as at the reporting date. The fair value of the unsecured notes disclosed on a recurring basis and also categorized as Level 2 within the fair value hierarchy is estimated using quoted prices and yields as at the reporting date. The fair value of the Company’s long term debt will fluctuate until maturity.
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