Financing policy and credit ratings
Maturities of financial indebtedness
Our financing policy is aimed at ensuring our solvency at all times, limiting the risks associated with financing and optimizing our cost of capital. We preferably meet our external financing needs on international capital markets.
We strive to maintain at least a solid A rating, which allows us unrestricted access to money and capital markets. Our financing measures are aligned with our operative business planning as well as the company’s strategic direction and also ensure the financial flexibility to take advantage of strategic options.
With “A+/A-1/outlook stable” from rating agency Standard & Poor’s and “A1/P-1/outlook stable” from Moody’s, we have good credit ratings, especially compared with competitors in the chemical industry. Standard & Poor’s last confirmed our long-term rating on November 22, 2013; Moody’s last confirmed our long-term rating on October 14, 2013, and pronounced the outlook stable. Both agencies maintained BASF’s short-term ratings.
Corporate bonds form the basis of our medium to long-term debt financing. These are issued in euros and other currencies with different maturities. Our goal is to ensure a balanced maturity profile and diverse range of investors, and to optimize our debt capital financing conditions.
For short-term financing, we use BASF SE’s commercial paper program, which has an issuing volume of up to $12.5 billion. On December 31, 2013, $1.70 billion worth of commercial paper was outstanding under this program. Firmly committed, syndicated credit facilities of €6 billion serve to cover the repayment of outstanding commercial paper, and can also be used for general company purposes.
These credit lines were not used in the course of 2013. Our external financing is therefore largely independent of short-term fluctuations in the credit markets.
Off-balance-sheet financing tools, such as leasing, are of minor importance to us. BASF Group’s most important financial contracts contain no side agreements with regard to specific financial ratios (financial covenants) or compliance with a specific rating (rating trigger).
Financial management in the BASF Group is centralized and supported by regional finance units. To minimize risks and exploit internal optimization potential within the Group, we bundle the financing, financial investments and foreign currency hedging of BASF SE’s subsidiaries. When possible, this occurs within the BASF Group. Foreign currency risks are primarily hedged centrally by means of derivative financial instruments in the market.