18 » Borrowings and Credit Lines
Borrowings are denominated in a variety of currencies in which adidas conducts its business. The largest portions of effective gross borrowings (before liquidity swaps for cash management purposes) as at December 31, 2019 are denominated in euro (2019: 99%; 2018: 97%).
The weighted average interest rate on the Group’s gross borrowings decreased to 1.5% in 2019 (2018: 2.1%).
As at December 31, 2019, adidas had cash credit lines and other long-term financing arrangements totaling € 3.6 billion (2018: € 3.7 billion); thereof unused credit lines accounted for € 1.9 billion (2018: € 2.0 billion). In addition, as at December 31, 2019, adidas had separate lines for the issuance of letters of credit and guarantees in an amount of approximately € 0.5 billion (2018: € 0.5 billion).
The amounts reported as gross borrowings represent outstanding borrowings under the following arrangements with aggregated expiration dates as follows:
|
|
Up to 1 year |
|
Between 1 and 3 years |
|
Between 3 and 5 years |
|
More than 5 years |
|
Total |
|---|---|---|---|---|---|---|---|---|---|---|
Bank borrowings incl. commercial paper |
|
43 |
|
38 |
|
38 |
|
46 |
|
165 |
Eurobond |
|
– |
|
598 |
|
– |
|
388 |
|
986 |
Equity-neutral convertible bond |
|
– |
|
– |
|
487 |
|
– |
|
487 |
Total |
|
43 |
|
636 |
|
525 |
|
434 |
|
1,638 |
|
|
Up to 1 year |
|
Between 1 and 3 years |
|
Between 3 and 5 years |
|
More than 5 years |
|
Total |
|---|---|---|---|---|---|---|---|---|---|---|
Bank borrowings incl. commercial paper |
|
66 |
|
38 |
|
38 |
|
66 |
|
207 |
Eurobond |
|
– |
|
597 |
|
– |
|
387 |
|
984 |
Equity-neutral convertible bond |
|
– |
|
– |
|
484 |
|
– |
|
484 |
Total |
|
66 |
|
635 |
|
522 |
|
453 |
|
1,676 |
The above table includes two Eurobonds amounting to € 1 billion in total issued on October 1, 2014. The seven-year Eurobond of € 600 million matures on October 8, 2021 and has a coupon of 1.25%. The twelve-year Eurobond of € 400 million matures on October 8, 2026 and has a coupon of 2.25%. The Eurobonds have denominations of € 1,000 each and were priced with a spread of 68 basis points and 100 basis points, respectively, above the corresponding euro mid-swap rate. The issue price was fixed at 99.145% and 99.357%, respectively.
On September 5, 2018, adidas AG issued a € 500 million equity-neutral convertible bond with a coupon of 0.05% due on September 12, 2023. The issue price was fixed at 104% of the notional amount, corresponding to an annual yield to maturity of negative 0.73%. The initial conversion price was determined to be € 291.84, a conversion premium of 40% over the reference share price of € 208.46. The economic risk exposure of share price movements was hedged by purchased call options on ordinary adidas AG shares.
Further details on future cash outflows are provided in this Annual Report. RISK AND OPPORTUNITY REPORT