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 |
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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.
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b Fair value hierarchy.
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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.
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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.