2019Statements

19 Borrowings

In agreements governing loans with a residual amount at year-end 2019 of €2,244 million (31 December 2018: €2,543 million, of which €300 million was of a short-term nature), negative pledge clauses have been included that restrict the provision of security.

The documentation of the €500 million bond issued in March 2014, the €500 million bond issued in April 2015, the €500 million bond issued in September 2015 and the €750 million bond issued in September 2016 include a change-of-control clause. This clause allows the bond investors to request repayment at par if 50% or more of the DSM shares are controlled by a third party and if the company is downgraded below investment grade (< BBB-). In August 2019, Moody's confirmed DSM's credit rating of 'A3' with a stable outlook. Standard & Poor's confirmed DSM's credit rating of 'A^-' with a stable outlook in September 2019. At 31 December 2019, there was €1,840 million in borrowings outstanding with a remaining term of more than 5 years (at 31 December 2018, there was €1,756 million in borrowings outstanding with a remaining term of more than 5 years).

The schedule of repayment of borrowings is as follows:

A breakdown of the borrowings by currency is given in the following table:

On balance, total borrowings increased by €1 million due to the following changes:

The average effective interest rate on the portfolio of borrowings outstanding in 2019, including hedge instruments related to these borrowings, amounted to 2.31% (2018: 2.24%).

A breakdown of debenture loans is given below:

All debenture loans have a fixed interest rate and are listed on the AEX.

The 2.375% EUR bond 2014–2024 of €500 million was pre-hedged by means of forward starting swaps, resulting in an effective interest rate for this bond of 3.97%, including the settlement of the pre-hedge.

The 1% EUR bond 2015–2025 of €500 million was pre-hedged by means of forward starting swaps, resulting in an effective interest rate for this bond at 3.65%, including the settlement of the pre-hedge.

The 1.375% EUR bond 2015–2022 of € 500 million has an effective interest rate of 1.40%.

The 0.75% EUR bond 2016–2026 of €750 million was pre-hedged by means of a collar resulting in an effective interest rate for this bond of 1.08%, including the settlement of the pre-hedge.

A breakdown of private loans is given below:

A breakdown of the lease liabilities is given below:

In addition to the contractual lease commitments, DSM has identified explicit renewal options available to DSM, which are currently not reasonably certain to be exercised and are therefore not included in the measurement of the lease. The associated future lease payments which are uncommitted and optional for DSM, are estimated around €76 million (undiscounted).

The interest expense on the lease liabilities was €7 million and the total repayments of the lease liabilities amounted to €53 million in 2019. These cash flows are reported as financing cash flows.

DSM's policy regarding financial-risk management is described in Note 23.