An analysis of debt by nature and due date is as follows:
|At December 31, 2013||At December 31, 2012|
|(€ million)||Due within|
|Borrowings from banks||1.796||3.176||177||5.149||2.484||2.329||361||5.174|
|Payables represented by securities||87||305||-||392||121||17||-||138|
|Total Other debt||2.069||8.729||237||11.035||3.569||5.722||1.634||10.925|
The item Asset-backed financing represents the financing received through both securitization and factoring transactions which does not meet IAS 39 derecognition requirements and is recognized as an asset in the statement of financial position. In 2013 there was an increase of approximately €1,501 million in asset backed financing, excluding exchange differences.
During the year Other debt increased, net of exchange differences, by €679 million. This increase is mainly due to the issue of new bonds and an increase in Borrowings from banks. During the period, the Group repaid bonds for an amount falling due of €753 million.
The major bond issues outstanding at December 31, 2013 by the Group are the following:
|Currency||Face value of|
bonds (in million)
|Global Medium Term Note:|
|CNH Industrial Finance Europe S.A. (1)||EUR||1.000||5.25%||March 11, 2015||1.000|
|CNH Industrial Finance Europe S.A. (1)||EUR||1.200||6.25%||March 9, 2018||1.200|
|Total Global Medium Term Note||2.200|
|CNH Capital LLC||US$||750||3.88%||November 1, 2015||544|
|CNH America LLC||US$||254||7.25%||January 15, 2016||184|
|CNH Capital LLC||US$||500||6.25%||November 1, 2016||363|
|CNH Capital LLC||US$||500||3.25%||February 1, 2017||363|
|Case New Holland Inc.||US$||1.500||7.88%||December 1, 2017||1.088|
|CNH Capital LLC||US$||600||3.63%||April 15, 2018||435|
|Total Other bonds||2.977|
|Hedging effect and amortized cost valuation||137|
(1) Bond listed in the Irish Stock Exchange.
The following bonds were issued by CNH Capital LLC during 2013 :
- a bond issued at par having a nominal value of US$600 million (equivalent to €435 million), falling due in 2018 and bearing fixed interest at a rate of 3.625% payable semi-annually;
- a bond issued at par having a nominal value of US$500 million (equivalent to €363 million), falling due in 2017 and bearing fixed interest at a rate of 3.25% payable semi-annually.
The bonds issued by the Group are governed by different terms and conditions according to their type; more specifically these are as follows, in addition to the above-mentioned bond issued in 2013:
- a bond issued at par by CNH Industrial Finance Europe S.A. as part of the Global Medium Term Note Program, having a nominal value of €1,000 million, falling due in 2015 and bearing fixed interest at a rate of 5.25%;
- a bond issued at par by CNH Industrial Finance Europe S.A. as part of the Global Medium Term Note Program, having a nominal value of €1,200 million, falling due in 2018 and bearing fixed interest at a rate of 6.25%;
- a bond issued at par by CNH Capital LLC having a nominal value of US$500 million, falling due in 2016 and bearing fixed interest at a rate of 6.25%, payable semi-annually;
- a bond issued by CNH Capital LLC at par having a nominal value of US$750 million, falling due in 2015 and bearing fixed interest at a rate of 3.875%, payable semi-annually;
- a bond issued by CNH America LLC for a total amount outstanding of US$254 million, falling due in 2016;
- a bond issued by Case New Holland Inc. at a price of 99.32% of its nominal value of US$1,500 million, falling due in 2017 and bearing fixed interest at a rate of 7.875%.
The unaudited prospectuses and offering circulars, or their abstracts, relating to the above-mentioned principal bond issues are available on the Group’s website at www.cnhindustrial.com under “Investors – Fixed income investors”.
The bonds issued by the Group contain commitments of the issuer, and in certain cases commitments of CNH Industrial N.V. in its capacity as guarantor, which are typical of international practice for bond issues of this type such as, in particular, negative pledges, pari passu and cross default clauses. A breach of these commitments can lead to the early repayment of the issued notes. In addition, the agreements for the bonds guaranteed by CNH Industrial N.V. contain clauses which could lead to early repayment if there is a change of control of CNH Industrial N.V. associated with a downgrading by a ratings agency.
The Group intends to repay the issued bonds in cash at the due date by utilizing available liquid resources. In addition, the companies in the Group may from time to time buy back bonds on the market that have been issued by the Group, also for purposes of their cancellation. Such buy backs, if made, depend upon market conditions, the financial situation of the Group and other factors which could affect such decisions.
Available committed credit lines expiring after twelve months amount to €1.6 billion at December 31, 2013 (€1.6 billion at December 31, 2012). Of these credit lines, the €2 billion credit facility of CNH Industrial, guaranteed by the parent company and available for €1,250 million at December 31, 2013, envisages typical covenants for contracts of this type and size, such as financial covenants (Net debt/EBITDA and EBITDA/Net interest ratios relating to industrial activities), negative pledges, pari passu, cross default and change of control clauses. The failure to comply with these covenants, in certain cases if not suitably remedied, can lead to the requirement to make early repayment of the outstanding loans. At December 31, 2013 there were no breaches of the above commitments.
The annual interest rates and the nominal currencies of debt at December 31, 2013 are as follows:
|(€ million)||less than 5%||from 5% to 7.5%||from 7.5%|
Debt with annual nominal interest rates in excess of 12.5% relates principally to the companies operating in Argentina and Brazil.
For further information on the management of interest rate and currency risk reference should be made to the section Risk Management and to Note 33.
At December 31, 2013 the Group had outstanding financial lease agreements for certain property, plant and equipment whose net carrying amount totaling €86 million (€76 million at December 31, 2012) is included in Property, plant and equipment (Note 15). Payables for finance leases included in Other debt amount to €54 million at December 31, 2013 (€49 million at December 31, 2012) and may be analyzed as follows:
|At December 31, 2013||At December 31, 2012|
|Minimum future lease payments||6||20||28||54||6||16||27||49|
|Present value of minimum lease payments||6||20||28||54||6||16||27||49|
As discussed in Note 15, finance lease payables also relate to suppliers’ assets recognized in the Consolidated Financial Statements in accordance with IFRIC 4.
Debt secured with mortgages and other liens on assets of the Group amounts to €116 million at December 31, 2013 (€112 million at December 31, 2012); this amount includes €54 million (€49 million at December 31, 2012) due to creditors for assets acquired under finance leases. The total carrying amount of assets acting as security for loans amounts to €151 million at December 31, 2013 (€143 million at December 31, 2012). In addition, the Group’s assets include current receivables and cash with a pre-determined use to settle asset-backed financing of €10,679 million at December 31, 2013 (€9,708 million at December 31, 2012).