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5 Financial instruments and net debt

Swisscom aims to have a net debt of around 1.9 times EBITDA (earnings before interest, taxes, depreciation and amortisation). Exceeding this limit temporarily is permitted. As at 31 December 2017, the net debt/EBITDA ratio was 1.7. Net debt comprises financial liabilities less cash and cash equivalents, current financial assets and non-current certificates of deposit, and derivative financial instruments for financing received.

Below is a breakdown of financial liabilities and net debt in the first three months of 2018 as well as the fair values of financial assets and liabilities:


In CHF million
  Carrying amount
31.12.2017
 
Issuance
 
Repayment
 
Other changes a
  Carrying amount
31.03.2018
 
Fair Value b
Bank loans   760     (35)   (4)   721   745 2
Debenture bonds   6,137   150     40   6,327   6,562 1
Private placements   493       1   494   503 2
Finance lease liabilities   461     (5)   3   459   872 2
Derivative financial instruments   60       (6)   54   51 2
Other financial liabilities   375     (2)   4   377   366 2
Total financial liabilities   8,286   150   (42)   38   8,432   9,099
Cash and cash equivalents   (525)               (819)   (819) 2
Other financial assets   (314)               (319) c   (332) 2
Net debt   7,447               7,294    
a Interest expense, interest payments as well as other changes.
b Fair value hierarchy.
c Not included are other financial assets with a carrying amount of CHF 103 million, trade receivables and payables as well as other receivables and liabilities whose carrying amount corresponds to a reasonable estimation of their fair value.

In the first quarter of 2018, Swisscom issued a debenture bond for CHF 150 million. It has a coupon of 1.0% and matures in 2035. In addition, in April 2018 Swisscom issued a debenture bond for EUR 500 million. It has a coupon of 1.125% and matures in 2026. The funds received were applied to repay existing debt. The debenture bond in EUR was designated for hedge accounting of net investments in foreign operations.