|US$ Million||Average interest rate|
|Secured borrowings (including realised interest rate swap costs)||3.6%||3.6%||763.3||29.1||22.1||(32%)|
|Convertible bonds (Note)||5.7%||3.3%||117.7||6.4||12.4||48%|
|KPI 3.9%||KPI 3.6%||881.0||35.5||34.5||(3%)|
|Unrealised interest rate swap income||-||(1.6)|
|Other finance charges||0.5||1.0|
|Total finance costs||36.0||33.9||(6%)|
|Interest coverage (calculated as EBITDA divided by total gross finance costs)||KPI 3.7x||0.7x|
|Note: The convertible bonds have a P/L cost of US$6.4 million and a cash cost of US$4.1 million.|
The KPIs on which management focuses to assess the cost of borrowings are average interest rates for different types of borrowings and the Group’s interest coverage (see table above).
The Group aims to achieve a balance between floating and fixed interest rates on its long-term borrowings. This is adjusted from time to time, depending on the interest rate cycle, using interest rate swap contracts where appropriate. During the year, all our interest rate swap contracts qualified for hedge accounting as cash flow hedges and US$0.9 million of interest rate swap contract costs were realised. As at 31 December 2017, 65% (2016: 65%) of the Group’s long-term borrowings were on fixed interest rates. As at 31 December 2018 and 2019, we expect about 65% of the Group’s existing long-term borrowings will be on fixed interest rates.