Securing flexible financing Markus Coenen Head of Group Finance, - - PowerPoint PPT Presentation
Securing flexible financing Markus Coenen Head of Group Finance, RWE AG RWE Credit Day London, 9 October 2012 2012 in financial terms so far H1 2012 operating performance: EBITDA +9%, operating result +9%, recurrent net income on last
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H1 2012 operating performance: EBITDA +9%, operating result +9%, recurrent net income on last year’s level Confirmation of guidance for FY 2012 Completion of hybrid bond programme – € 2 billion in total volume (in several currencies) achieved Confirmation of A3 (negative outlook) by Moody‘s; downgrade to BBB+ (stable outlook) by Standard & Poor’s Bond maturity in October 2012 (€ 1.8 bn) will be repaid out of cash
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Prudent financial policy Targeting a healthy and efficient balance sheet Strong liquidity profile > Securing access to money markets and capital markets at all times > Leverage factor (net debt to EBITDA mid term below or equal to 3.0) as an
> Mid-term target to cover investments and dividends by cash flow from
> Ample liquidity from strong operational cash flows and committed back-up line > Commercial Paper market can easily be accessed > Smooth maturity profile > Defined minimum liquidity to cover volatile trading business and collateralization > Long-term and fixed interest financing matching a long-term business > Conservative definition of net debt (including all major long-term provisions) > 73% of pension obligations funded by Contractual Trust Agreement (CTA)
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Capital market debt maturities1
in € bn
Strong sources of financing1
Maturities of debt issued Hybrids (first call dates) Accumulated outstanding debt (incl. hybrids)
1 RWE AG and RWE Finance B.V.,
as of September 30, 2012
Balanced profile with limited maturities up to end of 2014 (~€ 4.3 billion)
Fully committed syndicated loan (€ 4.0 bn up to Nov. 2016) Commercial paper (up to 1 year) $ 5.0 bn € 0.0 bn € 0.4 bn for liquidity back-up MTN programme (up to 30 years) € 30 bn € 16.2 bn )2
2 Bonds outstanding under the MTN-programme,
i.e. excluding hybrid. Including hybrid: € 20.0 bn
0,0 0,5 1,0 1,5 2,0 2,5 2012 2017 2022 2027 2032 2037 4 8 12 16 20
20,0
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Minimal Modest Inter- mediate Signifi- cant Aggressive Highly leveraged Excellent AAA AA A A- BBB
AA A A- BBB BB BB- Satis- factory A- BBB+ BBB BB+ BB- B+ Fair
BB+ BB BB- B Weak
BB- B+ B- Vulnerable
B CCC+
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Company
08/2012 S&P A-/stable A-/watch neg. 07/2012 S&P A-/stable A-/negative 07/2012 S&P A/negative A-/stable 07/2012 S&P A-/negative BBB+/stable 07/2012 Moody’s A1/watch neg. A1/negative 05-06/2012 Moody’s A3/negative Baa1/watch neg. 05/2012 06/2012 Moody’s S&P A3/stable A-/watch neg. Baa1/watch neg. BBB+/stable 03/2012 Moody’s A2/stable A2/negative 02/2012 02/2012 S&P Moody’s BBB/watch neg. Baa3/negative BB+/negative Ba1/negative 02/2012 Moody’s A2/stable A2/negative
Agency Before Current Date
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bps 26 July 2012 Last price before downgrade Vattenfall CDS 5Y E.ON CDS 5Y EnBW CDS 5Y RWE CDS 5Y iTraxx Industrials 5Y
Credit Default Swaps
40 60 80 100 120 140 160 180 02.07.2012 16.07.2012 30.07.2012 13.08.2012 27.08.2012 10.09.2012 24.09.2012
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Rendite RWE 2015er Anleihe
0,5 0,7 0,9 1,1 1,3
02.07.12 16.07.12 30.07.12 13.08.12 27.08.12 10.09.12 24.09.12
% 26 July 2012 Last price before downgrade Yield of RWE‘s 2015 bond RWE 5% 2015
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RWE Hybride in EUR, GBP und USD
4,0 4,5 5,0 5,5 6,0 6,5 7,0 02.07.2012 16.07.2012 30.07.2012 13.08.2012 27.08.2012 10.09.2012 24.09.2012
% Yield of RWE‘s hybrid bonds in EUR, GBP and USD 26 July 2012 Last price before downgrade USD (2017) GBP (2019) EUR (2015)
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Equity measure of € 2.1 bn in December 2011
> Accelerated bookbuilt offering with partial claw-back > Use of 28 million treasury shares with subscription rights > Use of authorised capital – 52 million new shares – without subscription rights > 14.3% of share capital issued at a price of 26 € per share
Completion of € 2.0 bn hybrid programme (50% equity credit)
Volume Currency (mn) Volume € (mn) CHF Nov 2011 250 204 GBP March 2012 750 897 USD April 2012 500 377 USD Tap July 2012 500 395 CHF July 2012 150 125 1.997 > > > > >
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With the extension of the European sovereign crisis uncertainty and mistrust concerning the credit standing of banks reached new all time highs: > RWE’s internal reference index* for bank CDS reached all time high end of 2011 > CDS spreads are extremely volatile and react nervous on market rumours > For several months especially CDS spreads
pressure > ECB's move to cut its deposit rate to zero led to negative short term deposit quotes > Banks with strong credit standing are reluctant to accept deposits from corporates Observations at the credit market
* The reference index used is the average 5y CDS of 29 large banks which are systemically important financial institutions according to the Financial Stability Board (FSB).
0,00 0,25 0,50 0,75 1,00 1,25 1,50 1,75 2,00 O/N 1W 2W 1M 2M 3M 4M 5M 6M 9M 1y in % EONIA (30.09.11) EONIA (28.09.12) money market curve (30.09.11) money market curve (28.09.12) 150 175 200 225 250 275 300 325 350 30.09.2011 30.11.2011 31.01.2012 31.03.2012 31.05.2012 31.07.2012 30.09.2012 spread in bp reference index (average of system relevant banks)
Money market rates negative in the short term Development reference index* since Sep 2011
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Rating CDS Equity
AA- A- BBB+ BBB
Credit indicators