Refinancing

The funds raised by Daimler in the year 2013 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 credit, 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, ABS).

C.31

Refinancing instruments
  Average interest rates Carrying values
  Dec. 31, 2013 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2012
    in %   in millions of euros
         
Notes/bonds and
liabilities from ABS transactions


2.14


1.86


44,875


40,845
Commercial paper 2.02 1.52 1,086 1,768
Liabilities to financial institutions
3.32

3.80

19,089

20,210
Deposits in the direct
banking business

1.54

2.13

11,257

12,121

Various issue 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 €35 billion, under which Daimler AG and several subsidiaries can issue bonds in various currencies. Other local capital-market programs exist, significantly smaller than the EMTN program however, in markets such as South Africa, Mexico, Thailand and Argentina. Capital-market programs allow flexible, repeated access to the capital markets.

In 2013, the Group covered its liquidity 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 table C.32)

C.32

Benchmark emissions
Issuer Volume Month of
emission
Maturity
       
Daimler Finance North America 750 million USD Jan. 2013 Jan. 2015
Daimler Finance North America 1,250 million USD Jan. 2013 Jan. 2016
Daimler Finance North America 1,000 million USD Jan. 2013 Jan. 2018
Daimler AG 1,000 million EUR Mar. 2013 July 2016
Daimler AG 500 million EUR Mar. 2013 Mar. 2023
Daimler AG 750 million EUR June 2013 June 2021
Daimler Finance North America 1,500 million USD Aug. 2013 Aug. 2016
Daimler Finance North America 1,500 million USD Aug. 2013 Aug. 2018
Daimler AG 500 million EUR Oct. 2013 Oct. 2016
Daimler AG 750 million EUR Oct. 2013 Apr. 2020
Daimler AG 1,000 million EUR Nov. 2013 Nov. 2018

In addition, a large number of smaller bonds were issued in various currencies in the euro market as well as in Canada, South Africa, Thailand, Brazil, Argentina, South Korea and Turkey. More than one third of the bond volume was issued in euros and more than one third was issued in US dollars.

The ongoing high degree of uncertainty in global financial markets in 2012, due in particular to the European sovereign-debt crisis, meant that issuers with good ratings were already able to place corporate bonds at attractive conditions, and conditions for Daimler continued to improve in 2013. Within the framework of our liquidity management, we therefore tended to raise more funds with longer maturities.

Daimler also issued commercial paper in small volumes in 2013.

In 2013, several asset-backed securities (ABS) transactions were carried out in the United States and Germany due to the favorable market environment. For example, in April and November 2013, a refinancing volume of $3.3 billion was generated in the United States through the issuance of ABS paper backed by leasing receivables. In addition, in July 2013, an ABS transaction with a volume of nearly $1 billion was placed in the United States based on credit receivables. In November, Mercedes-Benz Bank placed ABS bonds in a volume of €925 million, also backed by credit receivables, with European investors.

Bank credit was another important source of refinancing in 2013. Funds were provided not only by large, globally active banks, but increasingly also by a number of local banks. The lenders included supranational banks such as Kreditanstalt für Wiederaufbau (KfW), the European Investment Bank and the Brazilian Development Bank (BNDES). In this way, we continued our diversification in the field of refinancing through banks.

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. The credit line was over-subscribed and has more favorable conditions than the previous €7 billion facility. Daimler does not intend to utilize the credit line.

At the end of 2013, Daimler had short- and long-term credit lines totaling €35.4 billion (2012: €33.7 billion), of which €15.0 billion was not utilized (2012: €12.2 billion). They include a syndicated credit line arranged in September 2013 with a consortium of international banks with a volume of €9 billion, which has not been utilized.

The carrying values of the main refinancing instruments and the weighted average interest rates are shown in table C.31. At December 31, 2013, they are mainly denominated in the following currencies: 48% in euros, 25% in US dollars, 4% in Brazilian real, 3% in Japanese yen and 4% in Canadian dollars.

At December 31, 2013, the total of financial liabilities shown in the consolidated statement of financial position amounted to €77,738 million (2012: €76,251 million).

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