16 » Borrowings and Credit Lines

Borrowings are denominated in a variety of currencies in which adidas conducts its business. Whereas the largest portion of effective gross borrowings (before liquidity swaps for cash management purposes) as at December 31, 2021, are mainly denominated in euros (2021: 100%; 2020: 98%).

The weighted average interest rate on the Group’s gross borrowings decreased to 0.7% in 2021 (2020: 1.0%).

As at December 31, 2021, adidas had cash credit lines and other long-term financing arrangements totaling € 6.6 billion (2020: € 7.3 billion); thereof unused credit lines accounted for € 4.1 billion (2020: € 4.1 billion). In addition, as at December 31, 2021, adidas had separate lines for the issuance of letters of credit and guarantees in an amount of approximately € 0.6 billion (2020: € 0.5 billion).

On November 6, 2020, adidas entered into a new syndicated credit facility agreement with twelve banks totaling € 1.5 billion. The credit facility agreement was subsequently amended on October 8, 2021. The amended and restated credit facility with eleven partner banks will run until November 2026 and includes an extension option of one year exercisable in 2022. It can be drawn in euros and US dollars. The interest bearing is based on a defined margin on a reference rate (€STR or EURIBOR for euros).

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

Two Eurobonds were issued on October 1, 2014. A €600 million Eurobond with a term of seven years and a coupon of 1.25% was redeemed on July 8, 2021. A bond with a term of twelve years and a volume of €400 million has a coupon of 2.25% and matures on October 8, 2026. The Eurobond was issued with a denomination of € 1,000. The bond was issued with a spread of 100 basis points over the corresponding average euro swap rate, with the issue price being 99.357%.

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