71Spire Healthcare Limited PartnershipMarket riskMarket risk is the risk that changes in market prices, such as interest rates, will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.In the opinion of the General Partner the carrying value of the financial instruments is approximately equal to their fair value, except for floating rate debt which is after the deduction of £33 million (2009: £42 million) of issue costs.. Interest rate riskThe Group is exposed to interest rate risk arising from fluctuations in market rates. This affects future cash flows from money market investments and the cost of floating rate borrowings. As at 31 December 2010, 89% of the Group's borrowings were hedged by interest rate swaps and the cap, although the cap did not qualify for hedge accounting. Money market investments, held at floating rates of interest, represented 3% of total assets held by the Group.Generally the Group seeks to apply hedge accounting in order to manage volatility in the Income Statement.The Group has entered into a number of interest rate swaps in order to fix the interest payable on its bank loans, therefore minimising its exposure to interest rate risk.Interest rates on variable rate loans are determined by LIBOR fixings on a quarterly basis. Interest is settled on all loans in line with agreements and is settled at least annually.Variable£000Fixed £000Total£000Undrawn facility£00031 December 2010141,200 1,163,500 1,304,700 48,400 Effective interest rate3.19%7.67%7.18%31 December 2009152,300 1,163,500 1,315,800 52,375 Effective interest rate5.31%7.72%7.51%The following derivative contracts were in place at 31 December 2010:Interest rateMaturity dateNotional amount£000Carrying value£000Interest rate cap 2.00%October 2013105,000 (1,085)Interest rate swaps5.9735%August 20171,018,500 209,770 Interest rate swaps4.9950%April 201140,000 845 209,530 The following derivative contracts were in place at 31 December 2009:Interest rateMaturity dateNotional amount£000Carrying value£000Interest rate cap and floor6%-5%October 2010105,000 4,490 Interest rate swaps5.9735%August 20171,018,500 168,598 Interest rate swaps4.9950%April 201140,000 2,274 175,362

72Spire Healthcare Annual Review 2010Spire Healthcare Limited PartnershipNotes to the financial statementsFor the year ended 31 December 201025. Financial risk management continuedSensitivity analysis A change of 25 basis points in interest rates at the reporting date would have increased/(decreased) equity and reported results by the amounts shown below. This analysis assumes that all other variables remain constant.Profit or lossEquity25 bp increase£00025 bp decrease£00025 bp increase£00025 bp decrease£000At 31 December 2010Variable rate instruments(815)815 (815)815 Interest rate swaps662 (662)15,707 (15,707)Interest rate cap66 (66)66 (66)Sensitivity (net)(87)87 14,958 (14,958)Profit or lossEquity25 bp increase£00025 bp decrease£00025 bp increase£00025 bp decrease£000At 31 December 2009Variable rate instruments(822)822 (822)822 Interest rate swap662 (662)18,202 (18,202)Interest rate collar66 (66)66 (66)Sensitivity (net)(94)94 17,446 (17,446)