The carrying value of accrued interest receivable, due from the Province of Nova Scotia, other receivables, and accounts payable and accrued liabilities approximate their fair value because of their short term-to-maturity.
The fair value and book value, excluding any reserves, of loans receivable as at March 31, 2009 are $108,249 and $120,254 (2008 - $119,624 and $126,807) respectively. Certain notes receivable in the amount of $3,170 (2008 - $2,326) have no set terms of repayment and are carried on the financial statements at cost.
Equity investments in publicly-traded companies in the amount of $1,575 (2008 - $3,888) are recorded at fair market value, which represents the last bid price for the stock on the stock exchange. Equity investments in privately held companies in the amount of $16,387 (2008 - $12,318) are carried at cost less allowances in the financial statements. Due to the limited amount of comparable market information available, it was not practical to determine the fair value of these assets.
There are loan guarantees and other assets that represent investments and guarantees in privately held companies, as well as property acquired through foreclosure. Due to the limited amount of comparable market information available, it was not practical to determine the fair value of these assets. These assets are carried on the financial statements at cost.
The amount due to the Province of Nova Scotia is comprised of a series of separate notes. The fair value and book value of the amounts due to the Province of Nova Scotia with scheduled repayment terms as at March 31, 2009 are $67,076 and $56,204 (2008 - $71,394 and $63,191), respectively. Notes payable in the amount of $38,935 (2008 - $38,448) have no set terms of repayment and are carried on the financial statements at cost. The principal on this note is repaid to the Province as it is collected on the loans receivable financed by this note. Due to the volume of accounts financed by this note and the uncertainty with respect to timing of future cash flows, it is not practical to determine the fair value of this amount due to the Province of Nova Scotia.
The fair values of the loans receivable and the amount due to the Province of Nova Scotia are determined using Canadian bond market conventions.
The yield to maturity curve by month for the Corporation was estimated using the following assumptions:
a) The risk-free interest rate for each specified maturity term equal to the relevant benchmark Canada yield by term (Canada yield).
b) The Province of Nova Scotia credit spread relative to the Canada yield for each specified maturity term to reflect the Nova Scotia cost of funds as provided by CIBC World Markets.
c) The Corporation’s credit spread relative to the Province of Nova Scotia credit spread for each specified maturity term based on a Memorandum of Understanding between the Nova Scotia Department of Finance and the Corporation respecting the borrowings of the Corporation.
The Corporation’s yield to maturity on an annual basis for specified maturity terms is determined as the sum of the Canada yield, the Nova Scotia credit spread and the Corporation’s credit spread. These inputs were used to determine the Corporation’s yield to maturity curve by month.