17 » 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, 2022, are mainly denominated in euros (2022: 100%; 2021: 100%).

The weighted average interest rate on the Group’s gross borrowings increased to 0.8% in 2022 (2021: 0.7%).

As at December 31, 2022, adidas had cash credit lines and other long-term financing arrangements totaling € 7.5  billion (2021: € 6.6 billion); thereof unused credit lines accounted for € 4.0 billion (2021: € 4.1 billion). In addition, as at December 31, 2022, adidas had separate lines for the issuance of letters of credit and guarantees in an amount of approximately € 0.5 billion (2021: € 0.6 billion).

In November 2020, adidas entered into a new syndicated credit facility agreement with twelve banks totaling € 1.5 billion. The credit facility agreement was subsequently amended in October 2021 and in November 2022. The amended and restated credit facility with eleven partner banks has a size of € 2.0 billion and will run until November 2027. It can be drawn in euros and US dollars. The interest bearing is based on a defined margin on a reference rate (,€STRʻ or ,EURIBORʻ for euros).

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

The eurobond issued in October 2014 with a term of twelve years and a volume of € 400 million has a coupon of 2.25% and matures in October 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 in September 2024, with a coupon of 0.00% and the 15-year eurobond maturing in September 2035, with a coupon of 0.625% were issued in September 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 placement in September 2020, an eight-year eurobond was issued with a coupon of 0.00% maturing in October 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’ 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.

adidas AG issued in November 2022 two eurobonds with a size of € 500 million each. The three-year eurobond maturing in November 2025 bears a coupon of 3.00% and was issued at 99.901% issue price. The seven-year eurobond maturing in November 2029 bears a coupon of 3.125% and was issued at 99.272% issue price. These bonds were priced with a spread of 20 and 45 basis points, respectively, above the corresponding euro mid-swap rate. Proceeds from the offering will be used for general corporate purposes including the refinancing of upcoming maturities.

In September 2018, adidas AG issued a € 500 million equity-neutral convertible bond with a coupon of 0.05% due in September 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 these Notes.  SEE NOTE 29