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The following is an excerpt from a 20-F SEC Filing, filed by IUSACELL S A DE C V on 6/30/1999.
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IUSACELL S A DE C V - 20-F - 19990630 - MARKET_RISK

ITEM 9A. Market Risks

Iusacell's earnings are affected by changes in interest rates as a result of its long-term borrowings. Iusacell's short-term bridge loan bears interest at a variable rate of LIBOR plus 2.5%. The Chase Credit Facility bears interest at a variable rate equal to (at Iusacell's option):

. one-, two-, three- or six-month LIBOR plus 1.75%, or

. an alternate base rate equal to the higher of (a) the prime rate of The Chase Manhattan Bank, (b) the reserve adjusted secondary market rate for certificates of deposit plus 1% per annum and (c) the Federal Funds effective rate plus 0.5% per annum.

Iusacell also has fixed rate debt under the unsecured 10% Senior Notes.

Iusacell does not enter into derivative financial contracts for trading or speculative purposes; however, Iusacell manages the exposure to interest risk rate through the use of interest rate collars. In July 1998, Iusacell entered into an interest rate collar agreement. The interest rate collar agreement has a capped interest rate range of 6.12% to 7.12% above six-month LIBOR and a floor of 5.30% to 6.12% above six-month LIBOR on a notional amount of U.S.$35.0 million until July 30, 2002. The following table summarizes the maturity dates, carrying values and fair values of the debt obligations and the interest rate collar agreement as of December 31, 1998.

                            1999      2000      2001      2002      2003    Thereafter   Total    Fair Value
                         ---------- --------- --------- --------- --------- ---------- ---------- ----------
                                                    (in millions of U.S. dollars)
Short-term notes
 payable................ U.S.$ 75.0 U.S.$ --  U.S.$ --  U.S.$ --  U.S.$ --  U.S.$ --   U.S.$ 75.0 U.S.$ 75.0
Chase Credit Facility...        --       33.8      92.3      99.0       --        --        225.0      225.0
10% Senior Notes........        --        --        --        --        --      150.0       150.0      130.0
Interest rate collar....       35.0      35.0      35.0      35.0       --        --          --         1.1

73

On February 26, 1999, Iusacell entered into a second interest rate collar agreement to limit the maximum interest rate Iusacell must pay on U.S.$15.0 million of its floating rate debt. Under the terms of this second collar agreement, Iusacell's maximum effective LIBOR cost is limited to 5.82% if six- month LIBOR is lower than 6.82% and, if six-month LIBOR equals or goes above 6.82%, then Iusacell's maximum effective LIBOR cost is limited to 6.82%.

Iusacell's primary foreign currency exposure relates to its foreign currency denominated debt. Iusacell's debt obligations are denominated in U.S. dollars while it generates revenues in Mexican Pesos. Therefore, Iusacell is exposed to currency exchange rate risks that could significantly affect Iusacell's ability to meet its obligations. Iusacell currently does not plan to enter into hedging transactions with respect to these foreign currency risks, but continues to consider the appropriateness of this option. The exchange rate of Pesos to the U.S. dollar is a freely floating rate and the Peso has experienced significant devaluations in recent years. Any significant decrease in the value of the Peso relative to the U.S. dollar in the near term may have a material adverse effect on Iusacell and on its ability to meet its long-term debt obligations. As of December 31, 1998, a hypothetical immediate 10% devaluation of the Peso relative to the U.S. dollar, as it relates to Iusacell's foreign debt, would have a Ps.70.4 million (U.S.$7.1 million) unfavorable impact over a one-year period on earnings and on cash flows.

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