Financing Policy and Credit Ratings

• Financing principles remain unchanged
• Rated A by Moody’s, Standard & Poor’s and Fitch

Our financing policy aims to ensure 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 the international capital markets.

We strive to maintain a solid A rating, which ensures unrestricted access to financial and capital markets. Our financing measures are aligned with our operational business planning as well as the company’s strategic direction and also ensure the financial flexibility to take advantage of strategic options.

Maturities of financial indebtedness

Million €

BASF enjoys good credit ratings, especially compared with competitors in the chemical industry. On December 8, 2020, Standard & Poor’s confirmed its long and short-term ratings for BASF of A/A-1/outlook negative. Fitch confirmed its rating for BASF of A/F1/outlook stable on February 12, 2021. Moody’s confirmed its rating for BASF of A3/P-2/outlook stable on February 12, 2021.

We have solid financing. Corporate bonds form the basis of our medium to long-term debt financing. These are issued in euros and other currencies with different maturities as part of our €20 billion debt issuance program. The goal is to create a balanced maturity profile, diversify our investor base and optimize our debt capital financing conditions.

For short-term financing, we use BASF SE’s global commercial paper program, which has an issuing volume of up to $12.5 billion. As of December 31, 2020, commercial paper with a carrying amount of €1,290 million was outstanding under this program. A firmly committed, syndicated credit line of €6 billion was taken out in January 2019 to cover the repayment of outstanding commercial paper. It can also be used for general company purposes. In the second quarter of 2020, we took out a one-year credit line with several banks with a total volume of €3 billion. Neither credit line was used at any point in 2020. Our external financing is therefore largely independent of short-term fluctuations in the credit markets.

Financing instruments

Million €

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).

To minimize risks and leverage internal optimization potential within the Group, we bundle the financing, financial investments and foreign currency hedging of BASF SE’s subsidiaries within the BASF Group where possible. Foreign currency risks are primarily hedged centrally using derivative financial instruments in the market.

Our interest risk management generally pursues the goal of reducing interest expenses for the BASF Group and limiting interest risks. Interest rate hedging transactions are therefore conducted with banks in order to turn selected liabilities to the capital market from fixed to variable interest rates or vice versa.