Why tnb has been charged above the klibor

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Question - Tenaga Nasional Bhd, or TNB, is the largest electric utility company in Malaysia. The company is involved in the generation, transmission, distribution, and sale of electricity. It was incorporated in 1990 and it was known as Lembaga Letrik Negara (LLN) before it was privatised.

Currently, the firm is viewing the market will slowly change under the PEMULIH stimulus package. The firm to hedge RM30 million in the KLIBOR futures market between August and October 2021. Today, August 2022 the interest rate shows at 3.18% and the KLIBOR futures market price for August, September and October are quoted at 94.5, 95.2 and 95.7. Assume at the end of October 2021, both prices reduced by 1.5% and TNB will be charged above 1.5%.

Required -

1. Why TNB has been charged above the KLIBOR of 1.5%?

2. Is TNB achieve its price objective? Support by calculations.

3. What is/are the differences between speculating in KLCI futures and in KLIBOR futures?

Reference no: EM133186363

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