Fixed Income Investors
Ratings as at 31 December 2016
Moody’s Investors Service
S&P Global Ratings
In the 2016 financial year, the company‘s credit rating by the rating agencies Moody’s Investors Service and Fitch Ratings improved from Ba1 and BB+, respectively, to Baa3 and BBB-, respectively. S&P Global Ratings also awarded a BBB- credit rating. The outlook for our credit rating is assessed as stable. The upgrade of the credit rating to investment grade was mainly due to the stronger corporate profile following the acquisition of the Italcementi Group and its rapid integration.
We were able to successfully continue issuance activity in the money market during 2016 and issued a total volume of €1.8 billion via our €1.5 billion Euro Commercial Paper Programme over the course of 2016. At the end of the year, issuance activity under the Commercial Paper Programme was gradually reduced in order to limit excess liquidity at the end of the year. As at 31 December 2016, none of the commercial papers issued by HeidelbergCement AG remained outstanding. The €3 billion syndicated credit facility thereby serves as a backup line.
Multi-Currency Commercial Paper Programme
A Commercial Paper (CP) is a short-term note. The banks place the tranches of the programme to institutional and private investors. There is no obligation for the issuer to issue the tranches. The maturity of HeidelbergCement tranches is between 7 and 364 days. The interest cost for CPs is lower than for comparable day to day money or short term loans, because in contrary to the committed credit lines, the banks deal only on a best effort basis.
|Implementation date||July 24, 2013|
|Maturity||Between 7 and 364 days|
|Dealer of the day possibility||Yes|
|Clearing agency||Clearstream Banking AG, Frankfurt am Main;|
Euroclear Bank S.A./N.V., Brussels
|Fiscal agent||Deutsche Bank Aktiengesellschaft|
Große Gallusstraße 10-14
60272 Frankfurt am Main
HeidelbergCement has a stable financing structure for the long term and a well-balanced debt maturity profile (see the following diagram). We refinanced the Eurobond of €1 billion maturing in January 2017 by means of a bond of €750 million issued in January 2017 and by using available liquidity. In addition, we will refinance the bonds of €500 million and CHF 150 million that are due in April and November 2017 respectively, as well as the financial liabilities maturing in 2017, by making use of available liquidity, issuing on the capital market, or using free credit lines, depending on the capital market situation.
Debt Maturity Profile as at 31 December 20161) in €m
1) Excluding reconciliation adjustments of liabilities of €113.1 million (accrued transaction costs, issue prices, fair value adjustments, and purchase price allocation) as well as derivative liabilities of €85.3 million. Excluding also puttable minorities with a total amount of €73.8 million.
As at the end of 2016, we had liquidity reserves consisting of cash, securities portfolios, and committed bank credit facilities, amounting to €4.8 billion (see Group financial management section on page 83). With the €1.5 billion Euro Commercial Paper Programme and €10 billion EMTN Programme we also have framework programmes in the money and capital markets in place that allow us to issue the relevant securities within a short period of time.
Our objective is to further improve our financial ratios in the coming years in order to achieve the necessary preconditions for our credit rating to be upgraded further by the rating agencies. In particular, we have set the ambitious target to reduce the dynamic gearing ratio in a timely manner again to below 2.5x (31 December 2016: 3.0x) after the acquisition of Italcementi. A lasting investment grade rating remains our objective as – given the capital-intensive nature of our business – favourable refinancing opportunities in the banking, money, and capital markets create an important competitive advantage.