Notes to Consolidated Financial Statements [in thousands of Canadian dollars, except per share amounts] December 31, 2012 and 2011 Interest rate risk arises from the possibility that changes in interest rates will affect the value of fi nancial instruments.  Fluctuations in interest rates have a direct impact on the interest payments CI makes on its long-term debt. Debt outstanding on CI’s credit facility of $96,000 [2011 - $33,000] is borrowed at a floating interest rate. The existing  credit facility provides CI with the option of fixing interest rates, should CI change its view on its exposure to rising interest  rates. As at December 31, 2012, CI also has $500,000 fixed interest rate Debentures [2011 - $750,000]. In 2009 CI entered  into interest rate swap agreements with a Canadian chartered bank to convert the fixed interest rates on $250,000 of the  2012 Debentures and $200,000 of the 2014 Debentures to floating interest rates. Based on the amount borrowed under the credit facility and Debentures outstanding as at December 31, 2012, each 0.50%  increase or decrease in interest rates would result in annual interest expense increasing or decreasing by $1.5 million [2011  - $2.4 million], respectively. As at December 31, 2012, net financial assets of $8 million [2011 - $7 million] were denominated in U.S. currency. A 10%  increase or decrease in U.S. exchange rates would result in a foreign exchange gain or loss of $0.8 million [2011 - $0.7  million], respectively. CI may enter into forward contracts to manage its foreign exchange exposure. CI’s marketable securities as at December 31, 2012 of $66,155 [2011 - $42,099] are exposed to equity risk. Based on the  carrying amount of these assets, an increase or decrease in equity market prices by 10% would result in estimated gains  or losses of $6.6 million [2011 - $4.2 million], respectively. Liquidity risk arises from the possibility that CI will encounter difficulties in meeting its financial obligations as they fall  due. CI manages its liquidity risk through a combination of cash received from operations as well as borrowings under its  revolving credit facility. Liquidity is monitored through a daily cash management process that includes the projection of  cash flows to ensure CI meets its funding obligations. [B] LIQUIDITY RISK [iii] Equity risk [ii] Foreign exchange risk [i] Interest rate risk 79