This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognized and measured at fair value in the financial statements. An explanation of each level is as follows:
| Fair values | ||||||||||||||
| 31 December 2017 |
31 December 2016 |
Fair value hierarchy |
Valuation techniques |
|||||||||||
|
FX swap contracts |
(4,675 | ) | 611 | Level 2 | Present value of the estimated future cash flows based on observable yield curves and end period FX rates | |||||||||
|
Participating cross currency swap contracts (*) |
950,862 | 382,054 | Level 3 | Present value of the estimated future cash flows based on unobservable yield curves and end period FX rates | ||||||||||
|
Currency forward contracts |
(2,246 | ) | (1,286 | ) | Level 2 | Forward exchange rates at the balance sheet date | ||||||||
| (*) |
Participating cross currency swap contracts include EUR-TL interest and currency swap contracts, EUR put and call options, amounting to nominal value of EUR 560,000 and also USD-TL interest and currency swap contracts and put and call options amounting to nominal value of USD 400,000 in total. The EUR-TL participating cross currency swap contracts, which are EUR 100,000, EUR 150,000 and EUR 250,000, was combined into one contract as of 26 May 2017 and the maturity of the contracts was extended to 23 October 2025. Additionally, cross currency swap contracts include EUR-TL interest and currency swap contracts nominal value of EUR 43,585 and USD-TL interest and currency swap contracts amounting to nominal value of USD 298,611 in total. Cross currency swap contracts include EUR-TL, cross currency swap contracts nominal value of EUR 184,900 and USD-TL currency swap contracts amounting to nominal value of USD 238,400 in total. Regarding these contracts, TL 92,384 accrual of interest expense and TL 19,731 accrual of interest income has been reflected to consolidated financial statements as at 31 December 2017 (31 December 2016: TL 40,367 and TL 8,220 respectively). Since bid-ask spread is unobservable input; in valuation of participating cross currency swap contracts, prices in bid- ask price range which were considered the most appropriate were used instead of mid prices. If mid prices were used in the valuation the fair value of participating cross currency swap contracts would have been TL 129,870 lower as at 31 December 2017 (31 December 2016: TL 23,291). |