Due to the loan received from PGE Sweden AB (publ), PGE S.A. concluded CCIRS transactions, that hedge the exchange rate. In these transactions, banks - contractors pay PGE S.A. interest based on a fixed rate in EUR and PGE S.A. pays interest based on a fixed rate in PLN. In the consolidated financial statements the relevant portion of the CCIRS transaction is considered as a hedge of bonds issued by PGE Sweden AB (publ).
Hedge accounting is also applied to the IRS transactions hedging interest rate due to the financial liabilities under credit agreements such as the Credit Agreement with a syndicate of banks signed on September 7, 2015 and Credit Agreement with Bank Gospodarstwa Krajowego signed on December 17, 2014. Within the concluded IRS transactions, banks-contractors pay PGE S.A. interest based on a variable rate in PLN and PGE S.A. pays interest based on a fixed rate in PLN.
The PGE Group applies hedge accounting to the CCIRS and IRS transactions described above. The impact of hedge accounting on the hedging reserve is presented in note 20.2 of these financial statements.