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Debt

Debt structure

at 31 December 2017

 

 

highlights

Average debt life: 5.2 years

 

Liquidity position: 1.4 € bln, of which

  • Undrawn Credit Lines: 0.7 € bln
  • Cash: 0.7 € bln

Average Rate ~3.1%

 

Debt ratios
Items Value (in milion of euros)
2017 2016
Net Debt/Equity (x) 1.07 0.96
Net Debt/EBITDA (x) 2.66 2.55
Invester cover (x)(*) 0.19 0.33

(*) This ratio is calculated as Net Financial Charges/EBIT

 

 

 

 

Debt profile
Debt items Accounting balance
31/12/2017
Portions maturing
within 12 months
Portions maturing
beyond 12 months
Portion maturing in
31/12/2019 31/12/2020 31/12/2021 31/12/2022 beyond
Bonds 2,995 345 2,650 509 0 350 498 1,293
Bank loans and other 943 92 851 90 138 89 86 448
TOTAL 3,938 437 3,501 599 138 439 584 1,741

Source: Consolidated Financial Statement

Note

A2A consolidated gross debt at 31 December 2015, was equal to 3.8 € bln and its maturity profile was as follows:

within 2017: 9% 2018 - 2019: 28% 2020 - 2021: 17% beyond 2021: 46%

 

 

 

EMTN Programme

  • On 19 September 2012 the Management Board of A2A approved the adoption of a Bond Issue Programme (Euro Medium Term Note Programme) for a maximum amount of 2 billion euro, listed on the Luxembourg Stock Exchange
  • On 6 November 2014 the Board of Directors of A2A approved and authorized the update of the Programme, increasing the total amount of notes which may be issued thereunder to 4 billion euro. The Board authorized the issue of notes up to an aggregate amount of Euro 1 billion, by December 31, 2016
  • On 10 November 2016 the Board of Directors of A2A approved a framework resolution for the issue of notes to be issued under the existing EMTN Programme in one or more series or tranches, in one or more times, up to an aggregate amount of Euro 1 billion, by December 31, 2019
  • The adoption of the EMTN is part of the A2A Group’s medium-term financial strategy, which is aimed at lengthening the average life of the Company’s outstanding debt and at maintaining an adequate financial flexibility in order to efficiently manage the future debt maturities, to support the Company’s rating
  • The bonds to be issued on the basis of the Programme are placed to institutional investors.

A2A Bonds

The currently outstanding bonds issued by A2A Group account for about 2.9 € bn.

It should be noted that Euro Bonds 2027, 2025, 2022, 2021 and 2019 and Private Placement 2023 and 2024 were issued under the EMTN Programme and that the current bond rating – where applicable, is different from the issue rating and is equal to the M/L term rating assigned to the Company by S&P and Moody’s.

The bonds of the A2A Group are listed below.

 

On 11 October 2017, A2A has successfully launched the issue of a ten-year bond for a total amount of 300 million euro, exclusively targeted at institutional investors under its Euro Medium Term Notes Programme.

The notes have an annual coupon of 1.625% and were placed at an issue price equal to 98.700%, with a spread of 87 basis points over the reference mid-swap rate.

The bonds, governed by English law, and listed on the regulated market of the Luxembourg Stock Exchange as of October 19, 2017.

The issue will reduce the average cost of debt and, in line with the Group’s financial strategy, will increase the average maturity of debt and optimize the maturity profile.

The placement of the new notes was arranged by Citi Group Markets Limited, Goldman Sachs International, Mediobanca – Banca di Credito Finanziario S.p.A., Société Générale e UniCredit Bank AG. The Company was assisted by the legal advisor Legance – Avvocati Associati.

 

Code ISIN Issue quantity (EUR) Outstanding amount (EUR) Annual coupon (%) Issue date* Maturity date** % Issue price Re-offer Yield (%) Rating
XS1701884204 300,000,000 300,000,000 1.625 19/10/2017 19/10/2027 98.700 1.768 S&P's: BBB
Moody’s: Baa3

* Date from which interest is paid
** Last date on which interest accrues

 

Prospectus for details

A2A S.p.A. announces tender offer and the intention to issue new Notes - 11 October 2017

On 18 February 2015, A2A has successfully launched the issue of a ten-year bond for a total amount of 300 million euro, under its Euro Medium Term Notes Programme, which update and increase to a total of 4 billion euro has been approved by the Board of Directors on November 6, 2014.

The notes have an annual coupon of 1.75%, A2A’s lowest coupon ever, and were placed at an issue price equal to 99.221%, with a spread of 110 basis points over the reference mid-swap rate.

The bonds are exclusively targeted at institutional investors, governed by English law, and listed on the regulated market of the Luxembourg Stock Exchange as of February 25, 2015.

The issue – intended for debt repayment – will reduce the average cost of debt and, in line with the Group’s financial strategy, will increase the average maturity of debt and optimize the maturity profile.

The placement of the new notes was arranged by Banca IMI, Barclays, BNP Paribas and UniCredit as Joint Bookrunner.

 

Code ISIN Issue quantity (EUR) Outstanding amount (EUR) Annual coupon (%) Issue date* Maturity date** % Issue price Re-offer Yield (%) Rating
XS1195347478 300,000,000 300,000,000 1.750 25/02/2015 25/02/2025 99.221 1.836 S&P's: BBB , Outlook negativo
Moody’s: Baa3, Outlook negativo

* Date from which interest is paid
** Last date on which interest accrues

On 9 March 2017 A2A successfully privately placed with a limited number of qualified investors Euro 300 million notes with a seven-year maturity due in March 2024, issued under its Euro Medium Term Notes Programme.

The notes, governed by English law, have the following characteristics: a 1.25% annual fixed coupon rate; a 99.774% issue price and a 1.284% yield.

The issue of the notes is in line with the Group’s financial strategy, aimed at extending the average maturity of the Company’s debt and optimizing the management of maturities.

The placement of the notes has been managed by Morgan Stanley & Co. International plc.

The notes are listed on the regulated market of the Luxembourg Stock Exchange as of 16 March 2017.

 

Code ISIN Issue quantity (EUR) Outstanding amount (EUR) Annual coupon (%) Issue date* Maturity date** % Issue price Re-offer Yield (%) Rating
XS1581375182 300,000,000 300,000,000 1.25 16/03/2017 16/03/2024 99.774 1.284 S&P's: BBB

* Date from which interest is paid
** Last date on which interest accrues

On December 2, 2013 A2A has successfully privately placed a 300 million Euro tenyear bond under its 3 billion Euro Medium Term Notes Programme approved and increased by the Management Board of A2A on November 7, 2013.

The private placement is in line with the Group’s financial strategy, aimed at extending the average maturity of the Company’s debt stock and optimizing the maturity schedule. Proceeds will be used to reimburse the debt close to maturity.

The notes – with a minimum denomination of 100 thousand Euro, and maturity on December 4, 2023 – have a 4.000% annual coupon rate, and reoffer price of 99.539%. The re-offer yield is 4.057%, corresponding to 210 basis points over the underlying interest rate swap.

The notes are governed by English law. The settlement date is December 4, 2013, when the notes will be listed on the Luxembourg Stock Exchange.

Code ISIN Issue quantity (EUR) Outstanding amount (EUR) Annual coupon (%) Issue date* Maturity date** % Issue price Re-offer Yield (%) Rating
XS1000538022 300,000,000 300,000,000 4.000 04/12/2013 04/12/2023 99.539 4.057 Not applicable

* Date from which interest is paid
** Last date on which interest accrues

On December 9 2013, A2A has successfully placed on the European market a 500 million Euro bond due on January 13, 2022, under its 3 billion Euro Medium Term Notes Programme updated and increased on November 25, 2013. The issue was exclusively targeted to institutional investors.

The notes – with a minimum denomination of 100 thousand Euro – have a 3.625% annual coupon rate, and reoffer price of 99.561%. The re-offer yield is 3.688%, corresponding to 190 basis points over the underlying interest rate swap.

The issue – whose proceeds will be used for debt repayment – will allow to reduce the average interest rate on the Group’s debt and, in line with its financial strategy, extend the average maturity of the Company’s debt and optimizing the maturity schedule.

The notes are governed by English law. The settlement date is December 13, 2013, and following that date the notes will be traded on the Luxembourg Stock Exchange.

The placement of the notes was managed by Banca IMI, Credit Agricole, Mediobanca, and UniCredit, as Joint Bookrunners.

Code ISIN Issue quantity (EUR) Outstanding amount (EUR) Annual coupon (%) Issue date* Maturity date** % Issue price Re-offer Yield (%) Rating
XS1004874621 500,000,000 500,000,000 3.625 13/12/2013 13/01/2022 99.561 3.688 S&P's: BBB , Outlook negativo
Moody’s: Baa3, Outlook negativo

* Date from which interest is paid
** Last date on which interest accrues

On 2 July 2013 A2A issued a bond that was placed on the international Eurobond market and listed on the Luxembourg bond market.

The seven and half year bond has a nominal value of EUR 500 million and pays an annual fixed-rate coupon of 4.375%.

The bond has been issued under A2A's 2 billion Euro Medium Term Notes Programme and was approved by the Management Board on 12 February 2013.

The placement of the notes has been managed by BNP Paribas, Banco Bilbao Vizcaya Argentaria, Deutsche Bank and Société Générale CIB as Active Joint Bookrunners as well as Banca IMI, Mediobanca and UniCredit Bank as Passive Joint Bookrunners.

The bond ratings are the same as A2A ratings at the issue date.

The net proceeds of the issue has been mainly utilized to repay in advance a portion of A2A existing bonds: 500 M€ due 2014 and 1,000 M€ due 2016.

Code ISIN Issue quantity (EUR) Outstanding amount (EUR) Annual coupon (%) Issue date* Maturity date** % Issue price Re-offer Yield (%) Rating
XS0951567030 500,000,000 351,457,000 4.375 10/07/2013 10/01/2021 99.323 4.487 S&P's: BBB / A-2, Outlook negativo
Moody’s: Baa3 / P-3, Outlook negativo

* Date from which interest is paid
** Last date on which interest accrues

 

Prospectus for details

A2A S.p.A. announces final results and pricing of its tender offer - 2 december 2016

 

A2A S.p.A. announces the results of its tender offer and satisfaction of the new issue condition – 19 October 2017

 

On 23 November 2012 A2A issued a bond that was placed on the international Eurobond market and listed on the Luxembourg bond market.

The seven-year bond has a nominal value of EUR 750 million and pays an annual fixed-rate coupon of 4.5%.

The bond has been issued under A2A's 2 billion Euro Medium Term Notes Programme and was approved by the Management Board on 15 November 2012.

The placement of the notes has been managed by Banca IMI, BNP Paribas, Mediobanca and UniCredit Bank, as active Joint Bookrunners, as well as Banca Akros – Gruppo BPM and Centrobanca as passive Joint Bookrunners.

The bond ratings are the same as A2A ratings at the issue date.

Code ISIN Issue quantity (EUR) Outstanding amount (EUR) Annual coupon (%) Issue date* Maturity date** % Issue price Re-offer Yield (%) Rating
XS0859920406 750,000,000 510,703,000 4.500 28/11/2012 28/11/2019 99.718  4.548 S&P's: BBB / A-2, Outlook negativo
Moody’s: Baa3 / P-3, Outlook negativo

* Date from which interest is paid
** Last date on which interest accrues

 

Prospectus for details

A2A S.p.A. announces final results and pricing of its tender offer - 02 december 2016
 

A2A S.p.A. announces the results of its tender offer and satisfaction of the new issue condition – 19 October 2017

On 28 November 2013 LGH issued a bond that was placed on the international Eurobond market and listed on the Luxembourg bond market.
The issue has a nominal value of EUR 300 million and a five-year maturity. It pays an annual fixed-rate coupon of 3.875% and provides a Change of Control Put in the event of a change of control of the company. Following the acquisition by A2A S.p.A., this option was exercised by some bondholders for a total amount of 500 thousand euro, reimbursed on October 12, 2016.
The placement of the notes has been managed by Banca IMI and Unicredit Bank.

Code ISIN Issue quantity (EUR) Outstanding amount (EUR) Annual coupon (%) Issue date* Maturity date** % Issue price Re-offer Yield (%) Rating
XS0951567030 300,000,000 299,500,000 3.875 28/11/2013 28/11/2018 99.444 4.000 Fitch: BBB-

* Date from which interest is paid
** Last date on which interest accrues

 

Prospectus for details

Information prospectus

On 10 August 2006, ASM issued its second bond. It was not, however, placed on the market but wholly acquired by Aflac , one of the biggest US insurance groups and the largest in Japan.
The bond has a 30-year maturity with a half-yearly coupon; it is worth a total of around EUR 95 million and carries an annual fixed coupon of around 5.4%.

The loan, which was initially issued in yen (14 billion) with a yen fixed rate (3.2%), was converted into a euro-denominated bond via a cross currency swap.

The issue was launched with the support of Merrill Lynch rating agency Standard & Poors awarded the bond an A+ rating, the same rating given to ASM

Code ISIN Issue quantity (EUR) Outstanding amount (EUR) Annual coupon (%) Issue date* Maturity date** % Issue price Re-offer Yield (%) Rating
XS0261846066 98,000.000 98,000.000 5.405 10/08/2006  10/08/2036 100 n.d. A+

* Date from which interest is paid
** Last date on which interest accrues

On 27 October 2009 A2A issued a bond that was placed on the international Eurobond market and listed on the Luxembourg bond market.

The seven-year bond has a nominal value of EUR 1 billion and pays an annual fixed-rate coupon of 4.5%.

The placement was handled by investment banks Banca IMI, Banco Bilbao (BBVA), BNP Paribas, Calyon, Mediobanca

The bond ratings are the same as A2A ratings at the issue date.

Code ISIN Issue quantity (EUR) Outstanding amount (EUR) Annual coupon (%) Issue date* Maturity date** % Issue price Re-offer Yield (%) Rating
XS0463509959 1,000,000,000 0 4.500 02/11/2009 02/11/2016 99.255 4.627 S&P: BBB+ Credit Watch Negative

Moody’s: A3 Stable

* Date from which interest is paid
** Last date on which interest accrues

 

Prospectus for details

Information prospectus Euro Bond 2016

On 28 May 2004, ASM issued a bond that was listed on the Luxembourg market.

The issue has a nominal value of EUR 500 million and is made up of bearer bonds with a nominal value of EUR 100,000. It has a ten-year maturity and fixed coupon of 4.875%

Investment banks Barclays, Merrill Lynch Banca IMI placed the issue. Rating agency Standard & Poors awarded the bond an A+ rating, the same rating given to ASM

Code ISIN Issue quantity (EUR) Outstanding amount (EUR) Annual coupon (%) Issue date* Maturity date** % Issue price Re-offer Yield (%) Rating
XS0193337796 500,000,000 0 4.875 28/05/2004 28/05/2014 99.304 n.d. A+

* Date from which interest is paid
** Last date on which interest accrues

 

Prospectus for details

Information prospectus

On 17 October 2003 AEM issued a bond that was placed on the international Eurobond market and listed on the Luxembourg bond market.

The ten-year bond has a nominal value of EUR 500 million and pays an annual fixed-rate coupon of 4.87%.

The placement was handled by investment banks JP Morgan, Mediobanca e Unicredit Banca Mobiliare. Standard & Poors awarded a credit rating of BBB to the issue, the same rating as that given to the issuer, AEM.

Code ISIN Issue quantity (EUR) Outstanding amount (EUR) Annual coupon (%) Issue date* Maturity date** % Issue price Re-offer Yield (%) Rating
XS0179091425 500,000,000 0 4.875 30/10/2003 30/10/2013 99.767 n.d. BBB

* Date from which interest is paid
** Last date on which interest accrues

 

Prospectus for details

Information prospectus

Rating

The view of rating agencies on A2A debt.

A2A rating
Agencies View Current rating Last change on
Standard & Poor's M/L Term Rating
Short-Term Rating
Outlook
BBB
A-2
Stable
20/07/2015
Moody's M/L Term Rating
Outlook
Baa2
Stable
27/04/2018
Comparison of Standard & Poor's and Moody's M/L Term Rating Scales
Investment Grade Non investment Grade
S&P
MOODY'S
S&P
MOODY'S
AAA Aaa BB+ BA1
AA+ Aa1 BB BA2
AA  Aa2 BB- BA3
A+  A1 B B2
A A2 B- B3
A-  A3 CCC+ CAA1
BBB+ Baa1 CCC CAA2
BBB  Baa2 CCC- CAA3
BBB-  Baa3 CC CA
    C C
    D  

For further details

Press Releases:

Moody’s upgrades A2A’s ratings from Baa3 to Baa2 with stable outlook

Standard & Poor’s confirms BBB/A-2 ratings and improves outlook from “negative” to “stable”

 

For further information about Standard and Poor's and Moody's rating definitions, please visit following links:

Standard & Poor's Ratings Definitions

Moody's Ratings Definitions

Interest rate risk

As at December 31, 2017, bank borrowings and other financing obtained by the A2A Group may be broken down as follows:

Financing structure (in milions of euro)
Items
 
31 December 2017 31 December 2016
no derivatives with derivatives % with derivatives no derivatives with derivatives with derivatives
Fixed rate 3,076 2,800 82% 2,800 2,800 74%
Floating Rate 862 702 18% 1,152 995 26%
Total 3,938 3,938   3,795 3,795  

 

 

Loan Derivatives Accounting
A2A S.p.A. loan with BEI: expiring in November 2023, residual balance at December 31, 2017 amounting to 114.3 million euro, at floating rate interest. Collar to fully cover the loan and the same maturity, with a floor on Euribor rate 2.99% and 4.65% cap. At December 31, 2017, the fair value was negative for 10.6 million euro. The loan is measured at amortized cost. The collar is a cash flow hedge, with 100% recognized in a specific equity reserve.
Linea Energia loan with Unicredit: maturity May 2021, residual balance at December 31, 2017 amounting to 17.7 million euro, at floating rate. IRS on 100% of the amount of the loan until maturity thereof. At December 31, 2017, the fair value was negative for 0.7 million euro The loan is measured at amortized cost. The IRS is a cash flow hedge, with 100% recognized in a specific equity reserve.
LD Reti loans with UBI and CDDPP: maturity December 2020 and December 2022, residual balance at December 31, 2017 amounting to 3.6 million euro, at floating rate. IRS on 40% of the amount of the loan until maturity thereof. At December 31, 2017, the fair value was negative for 0.2 million euro The loan is measured at amortized cost. The IRS is a cash flow hedge, with 100% recognized in a specific equity reserve
11 Leases of A2A Rinnovabili with various credit institutions and maturities, total debt at December 31, 2017 of 27.5 million euro, at variable rate. IRS on 88% of the lease amount. At December 31, 2017, the fair value was negative for 4.1 million euro. The IRS are in cash flow hedge, with 100% recognized in a specific equity reserve.

In order to analyze and manage the risks relating to interest rate risk the Group has developed an internal model enabling the exposure to this risk to be calculated using the Montecarlo method, assessing the effect that fluctuations in interest rates may have on future cash flows. Under this methodology at least ten thousand scenarios are simulated for each key variable on the basis of the associated volatilities and correlations, using market rate forward curves for future levels. In this way, a probability distribution of the results is obtained from which the worst case scenario and best case scenario can be extrapolated using a 99% confidence level.

More details are available in the 2017 Consolidated Financial Statement, under Risk Management section.