Debt & ratings
Our financial strategy aims to consolidate the present debt characteristics - low cost, long average debt duration and a high percentage of fixed rate debt.
The financial strategy is one of the pillars of our 2017-2023 Strategic Plan. The financial efficiency programme we are committed to implementing involves constantly maintaining the debt structure at optimum balance, with the ultimate objective of keeping costs to the lowest levels possible.
We expect that over the course of the Strategic Plan, cash generation will remain strong, able to support both the workforce growth and the distribution of dividends. We also expect that cash flow generation will allow us to maintain our current credit rating.
Debt structure in line with:
- Regulatory profile
- Limited exposure to interest rates
- Financial outperformance
- Control of refinancing risk
- Competitive cost of borrowing, in line with guidance
Solid and efficient debt structure
- Investment grade rating: Moody’s Baa1, Fitch BBB+
- Net financial position at the end of 2017: €3.72 billion
- Leverage (NFP/RAB) at the end of 2017: 61%
- Fixed rate portion of the debt 2017: 71%
- Average cost of borrowing below 1%.
Italgas Net Debt Structure (€ bn)
as at 31 December 2017
as at 31 December 2017
In 2017, we issued bonds for €2.65 billion:
- €1.5 billion, issued on 19 January 2017 and divided into two tranches, the first with a term of 5 years and the second of 10 years, both at a fixed rate, amounting to €750 million each with an annual coupon of 0.50% and 1.625%, respectively.
- €650 million issued on 14 March 2017, maturing on 14 March 2024 with an annual fixed-rate coupon of 1.125%.
- €500 million issued on 18 September 2017, maturing 18 January 2029 and annual fixed-rate coupon of 1.625%.
These bonds were issued as part of the Euro Medium Term Notes Programme of the company, renewed on 9 November 2017 and increased to a total of €3.5 billion, as approved by the Board of Directors on 23 October 2017. The program, valid until 31 October 2018, provides for the issue of one or more bond issues, to be placed with institutional investors operating in Europe.
The issues allowed us to fully repay the floating rate Bridge to Bond loan of €2.3 billion as early as April 2017. The Bridge to Bond facility had been disbursed by a pool of 11 banks as part of a financing package signed by Italgas and leading banks in October 2016. The package also included two variable-rate revolving credit lines, supplied by the same pool of banks for a total committed amount of €600 million and €500 million and a duration of 3 and 5 years respectively, and a 3-year floating rate term loan for a total of €200 million maturing in October 2019.
The reopening on 30 January 2018 of the bond issue originally launched on 18 September 2017 (€500 million, maturing 18 January 2029 with 1.625% coupon) for a total of €250 million allowed us to make a partial early settlement, in February 2018, of the €200 million term loan, and to continue optimising the debt structure, increasing its average term and fixed-rate percentage.
In addition to these, there is the funding made available by the European Investment Bank (EIB) amounting to €784 million as at 31 December 2017. On 19 December 2017, in fact, we finalised a new 20-year EIB loan for €360 million, to finance a Network Upgrade project that consists in extension and enhancement of the gas distribution network, the installation of smart meters, as well as the modernisation and replacement of existing assets to improve the safety and operating efficiency of the network. At the time this loan was disbursed, a previous EIB loan of €300 million was repaid.
Lastly, January 2018 saw the finalisation of an Interest Rate Swap transaction maturing in 2024, through which the entire amount of the EIB “Gas Network Upgrade” loan of €360 million was transformed from floating rate to fixed rate.
To learn more, see the sub-page dedicated to the EMTN Programme
ultimo aggiornamento Wed Jun 20 12:39:45 UTC 2018