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, 2020 are denominated in euro (2020: 98%; 2019: 99%).

The weighted average interest rate on the Group’s gross borrowings decreased to 1.0% in 2020 (2019: 1.5%).

As at December 31, 2020, adidas had cash credit lines and other long-term financing arrangements totaling € 7.3 billion (2019: € 3.6 billion); thereof unused credit lines accounted for € 4.1 billion (2019: € 1.9 billion). In addition, as at December 31, 2020, adidas had separate lines for the issuance of letters of credit and guarantees in an amount of approximately € 0.5 billion (2019: € 0.5 billion).

On November 6, 2020, adidas entered into a new syndicated credit facility agreement with 12 banks totaling € 1.5 billion. The credit facility will run until November 2025 and includes two extension options of one year each after year 1 and year 2. It can be drawn in euro and further currencies. The interest bearing is based on a defined margin on a reference rate (€STR or EURIBOR for euro). This new syndicated loan facility transaction replaced the syndicated revolving loan facility under participation of KfW, Germany’s state-owned development bank.

The amounts reported as gross borrowings represent outstanding borrowings under the following arrangements with aggregated expiration dates as follows:

The above table includes five Eurobonds with a total outstanding value of € 2.5 billion.

Two of these eurobonds were issued on October 1, 2014. The seven-year eurobond of € 600 million has a coupon of 1.25% and matures on October 8, 2021. The twelve-year eurobond of € 400 million and a coupon of 2.25% maturing on October 8, 2026. 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.

In 2020, adidas issued three rated eurobonds with a size of € 500 million and denominations of €100,000 each. The four-year eurobond maturing on September 9, 2024 with a coupon of 0.00% and the fifteen-year eurobond maturing on September 10, 2035 with a coupon of 0.625% were issued on September 1, 2020. These bonds were priced with a spread of 33 basis points and 63 basis points, respectively, above the corresponding euro mid-swap rate. The issue price was fixed at 100.321% and 99.360%, respectively. In adidas’ inaugural sustainability bond issuance on September 29, 2020 an eight-year eurobond was issued with a coupon of 0.00% maturing on October 5, 2028. The sustainability bond was priced with a spread of 40 basis points above the corresponding euro mid-swap rate. The issue price was fixed at 99.410%. Proceeds from the issuance will be used in accordance with adidas’ newly created sustainability bond framework. Eligible sustainable projects include investments into sustainable materials and processes, as well as projects with a positive impact on the community. More specifically, this includes the sourcing of recycled materials for sustainably manufactured products, investments into renewable energy production and energy-efficient buildings as well as various initiatives aimed at creating lasting change in underrepresented communities.

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. See Risk and Opportunity Report