Annual Report 2016

Refinancing

The funds raised by Daimler in the year 2016 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 €50 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 continued expansive monetary policy of the central banks also affected the situation in the bond markets in the reporting period. The high volumes of available liquidity meant that risk premiums for companies with investment-grade credit ratings remained moderate.

In the reporting period, 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 B.31)

In April and November 2016, Daimler AG placed bonds in the domestic capital market of the People’s Republic of China, so-called panda bonds, each with a volume of CNY4.0 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 2016.

Furthermore, several asset-backed securities (ABS) transactions were carried out in the United States, Canada, Germany and China. In the United States for example, six emissions generated a refinancing volume totaling US$6.6 billion. Bonds in a volume of C$0.5 billion were issued in Canada. In addition, Mercedes-Benz Bank sold ABS bonds in a volume of €1.0 billion to European investors through its Silver Arrow Platform. For the first time, two ABS transactions were successfully placed in China with a total volume of CNY6.4 billion. In addition, an existing ABS transaction in the amount of €0.4 billion was taken over into the portfolio with the acquisition of Athlon on December 1, 2016.

Bank credit was another important source of refinancing in 2016. Funds were provided not only by large, globally active banks, but increasingly also by a number of local banks. The lenders also included supranational banks such as the European Investment Bank and the Brazilian Development Bank (BNDES).

In order to secure sufficient financial flexibility, in September 2013, Daimler concluded a €9 billion syndicated credit facility with a consortium of international banks with a maturity of five years and two extension options of two years in total. This provides the Group with financial flexibility until the year 2020. More than 40 European, American and Asian banks participated in the consortium. Daimler does not intend to utilize the credit line.

At the end of 2016, Daimler had not utilized short- and long-term credit lines totaling €18.1 billion (2015: €18.5 billion). They include the syndicated credit facility arranged in September 2013 with a consortium of international banks with a volume of €9 billion.

The carrying values of the main refinancing instruments and the weighted average interest rates are shown in table B.30. At December 31, 2016, they are mainly denominated in the following currencies: 41 % in euros, 30 % in US dollars, 6 % in Chinese renminbi, 4 % in Canadian dollars, 3 % in British pounds and 3 % in Japanese yen.

At December 31, 2016, the total of financial liabilities shown in the consolidated statement of financial position amounted to €117,686 million (2015: €101,142 million).

Detailed information on the amounts and terms of financing liabilities is provided in Notes 24 and 32 of the Notes to the Consolidated Financial Statements. Note 32 also provides information on the maturities of the other financial liabilities.

B. 30 Refinancing instruments

  Average interest rates Carrying values
  Dec. 31,
2016
Dec. 31,
2015
Dec. 31,
2016
Dec. 31,
2015
  in % In millions of euros
         
Notes/bonds and liabilities from ABS transactions   1.64 1.69   73,648 58,789
Commercial paper   2.71 1.35   1,701 2,961
Liabilities to financial institutions   2.96 2.58   29,674 27,311
Deposits in the direct banking business   0.65 0.71   11,642 10,532

B.31 Benchmark issuances

Issuer Volume Month of emission Maturity
       
Daimler AG €1,250 million Jan. 2016 Jan. 2019
Daimler AG €1,000 million Jan. 2016 Jan. 2021
Daimler AG €1,000 million Jan. 2016 Jan. 2024
Daimler AG €1,000 million Mar. 2016 Mar. 2018
Daimler AG €1,500 million Mar. 2016 Sep. 2019
Daimler AG €1,000 million Mar. 2016 Mar. 2026
Daimler AG €1,250 million May 2016 May 2020
Daimler AG €750 million May 2016 May 2023
Daimler AG €1,250 million May 2016 May 2028
Daimler Finance North America LLC US$250 million July 2016 July 2019
Daimler Finance North America LLC US$1,500 million July 2016 July 2019
Daimler Finance North America LLC US$1,250 million July 2016 July 2021
Daimler Finance North America LLC US$400 million Oct. 2016 Oct. 2019
Daimler Finance North America LLC US$1,100 million Oct. 2016 Oct. 2019
Daimler Finance North America LLC US$1,000 million Oct. 2016 Oct. 2021
Daimler Finance North America LLC US$400 million Jan. 2017 Jan. 2020
Daimler Finance North America LLC US$1,000 million Jan. 2017 Jan. 2020
Daimler Finance North America LLC US$850 million Jan. 2017 Jan. 2020
Daimler Finance North America LLC US$750 million Jan. 2017 Jan. 2027
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