Refinancing

The funds raised by Daimler in the year 2018 primarily served to refinance the leasing and sales-financing business. For that purpose, Daimler made use of a broad spectrum of various financing instruments in various currencies and markets. They include bank loans, commercial paper in the money market, bonds with medium and long maturities, customer deposits at Mercedes-Benz Bank, and the securitization of receivables from customers in the financial services business (asset backed securities).

Various issuance programs are available for raising longer-term funds in the capital market. They include the Euro Medium Term Note program (EMTN) with a total volume of €60 billion, under which Daimler AG and several subsidiaries can issue bonds in various currencies. Other local capital-market programs exist, which are significantly smaller than the EMTN program. Capital-market programs allow flexible, repeated access to the capital markets.

The monetary policy of the central banks also affected the situation in the bond markets significantly in the reporting period. The high volumes of available liquidity meant that risk premiums for companies with investment-grade credit ratings largely remained moderate.

In the year under review, the Group covered its refinancing requirements mainly through the issuance of bonds. A large proportion of those bonds were placed in the form of so-called benchmark emissions (bonds with high nominal volumes) in the US dollar and euro markets. (See graphic B.30)

B.30 Benchmark issuances

Issuer Volume Month of emission Maturity
       
Daimler International
Finance B.V.

€750 million

Jan/2018

Jan/2023
Daimler Finance
North America LLC

US$1,700 million

Feb/2018

Feb/2021
Daimler Finance
North America LLC

US$675 million

Feb/2018

Feb/2023
Daimler Finance
North America LLC

US$625 million

Feb/2018

Feb/2028
Daimler International
Finance B.V.

€500 million

Apr 2018

Apr 2020
Daimler Finance
North America LLC

€1,000 million

May 2018

May 2020
Daimler Finance
North America LLC

US$1,700 million

May 2018

May 2021
Daimler Finance
North America LLC

US$1,000 million

May 2018

May 2023
Daimler Finance
North America LLC

US$300 million

May 2018

Feb/2028
Daimler International
Finance B.V.

€1,000 million

May 2018

May 2022
Daimler International
Finance B.V.

€1,250 million

May 2018

Nov/2025
Daimler International
Finance B.V.

€1,500 million

Aug/2018

Aug/2021
Daimler International
Finance B.V.

€1,000 million

Aug/2018

Apr/2024
Daimler International
Finance B.V.

US$500 million

Aug/2018

Feb/2027
Daimler Finance
North America LLC

US$1,750 million

Nov/2018

Nov/2021

In the Chinese market, Daimler placed seven so-called panda bonds with a total volume of CNY 15.0 billion. In addition, a large number of smaller bonds were issued in various currencies and markets.

Daimler also issued small volumes of commercial paper in 2018.

In 2018, asset-backed securities (ABS) were issued in the United States, Canada, Germany, the United Kingdom and China. In the United States, a total refinancing volume of USD 7.6 billion was generated in six transactions, and in Canada, a volume of CAD 1.0 billion in two transactions. In addition, Mercedes-Benz Bank sold an ABS bond worth €0.75 billion to European investors via the Silver Arrow platform. In the United Kingdom, GBP 0.4 billion was successfully placed with investors. In China, two ABS transactions with a volume of CNY 16.0 billion were successfully placed.

Bank credit was another important source of refinancing in 2018. Loans were provided by globally active banks as well as by nationally operating banks. The lenders also included supranational banks such as the European Investment Bank and the Brazilian Development Bank.

In July 2018, Daimler successfully concluded negotiations with a consortium of international banks for a new syndicated credit facility with a volume raised from €9 billion to €11 billion. With a term of five years, it grants Daimler additional financial flexibility until 2023. The term can be extended to 2025. Daimler does not intend to utilize the credit line.

At the end of 2018, Daimler had unutilized short- and long-term credit lines totaling €26.8 billion (2017: €21.0 billion). They include the credit facility arranged in July 2018 with a volume of €11 billion.

The carrying values of the main refinancing instruments and the weighted average interest rates are shown in table (See table B.29). At December 31, 2018, they are mainly denominated in the following currencies: 42 % in euros, 25 % in US dollars, 9 % in Chinese renminbi, 4 % in British pounds, 3 % in Canadian dollars and 3 % in Japanese yen.

B.29 Refinancing instruments

  Average interest rates Carrying values
  Dec. 31,
2018
Dec. 31,
2017
Dec. 31,
2018
Dec. 31,
2017
  in % In millions of euros
         
Notes/bonds and liabilities from ABS transactions 2.24 1.88 88,942 78,110
Commercial paper 1.13 2.64 2,835 1,045
Liabilities to ­financial institutions 3.73 3.09 39,400 34,555
Deposits in the direct banking business 0.58 0.42 11,774 11,460

At December 31, 2018, the total of financial liabilities shown in the consolidated statement of financial position amounted to €144.9 billion (2017: €127.1 billion).

Detailed information on the amounts and terms of financing liabilities is provided in Note 24 and 33 of the Notes to the Consolidated Financial Statements. Note 33 also provides information on the maturities of the other financial liabilities.

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