43.3 Borrowings

 

43.3.1 Long-term borrowings (including the portion falling due within 12 months) - €57,583 million

The following table reports the carrying amount and fair value for each category of debt, including the portion falling due within 12 months. For listed debt instruments, the fair value is given by official prices, while for unlisted debt instruments, fair value is determined using valuation techniques appropriate for each category of financial instrument and the associated market data for the reporting date, including the credit spreads of Enel SpA.
The table reports the situation of long-term borrowings and repayment schedules at December 31, 2019, broken down by type of borrowing and interest rate.

Millions of euro

Nominal value

Carrying amount

Current portion

Portion due in more than 12 months

Fair value

Nominal value

Carrying amount

Current portion

Portion due in more than 12 months

Fair value

Changes in carrying amount

 

at Dec. 31, 2019

at Dec. 31, 2018

 

Bonds:

           

- listed, fixed rate

27,312

26,593

1,621

24,972

31,073

23,811

23,099

845

22,254

25,944

3,494

- listed, floating rate

3,515

3,488

258

3,230

3,655

3,187

3,166

305

2,861

3,288

322

- unlisted, fixed rate

14,458

14,359

-

14,359

15,794

12,860

12,758

-

12,758

12,563

1,601

- unlisted, floating rate

760

760

27

733

753

951

951

191

760

932

(191)

Total bonds

46,045

45,200

1,906

43,294

51,275

40,809

39,974

1,341

38,633

42,727

5,226

Bank borrowings:

           

- fixed rate

896

893

279

614

947

1,495

1,486

477

1,009

1,539

(593)

- floating rate

8,610

8,565

842

7,723

8,642

8,987

8,954

1,353

7,601

8,817

(389)

- use of revolving credit lines 

70

70

-

70

70

209

209

-

209

210

(139)

Total bank borrowings

9,576

9,528

1,121

8,407

9,659

10,691

10,649

1,830

8,819

10,566

(1,121)

Leases:

           

- fixed rate

1,856

1,856

257

1,599

1,856

561

561

49

512

561

1,295

- floating rate

108

108

18

90

108

96

96

16

80

96

12

Total leases

1,964

1,964

275

1,689

1,964

657

657

65

592

657

1,307

Other non-bank borrowings:

           

- fixed rate

792

822

92

730

811

1,008

988

115

873

1,024

(166)

- floating rate

86

69

15

54

75

101

82

16

66

86

(13)

Total other non-bank borrowings

878

891

107

784

886

1,109

1,070

131

939

1,110

(179)

Total fixed-rate borrowings

45,314

44,523

2,249

42,274

50,481

39,735

38,892

1,486

37,406

41,631

5,631

Total floating-rate borrowings

13,149

13,060

1,160

11,900

13,303

13,531

13,458

1,881

11,577

13,429

(398)

TOTAL

58,463

57,583

3,409

54,174

63,784

53,266

52,350

3,367

48,983

55,060

5,233


The table below reports long-term financial debt by currency and interest rate.

Long-term financial debt by currency and interest rate

Millions of euro

Carrying amount

Nominal value

Carrying amount

Nominal value

Current average nominal interest rate

Current effective

interest rate

 

at Dec. 31, 2019

at Dec. 31, 2018

at Dec. 31, 2019

Euro

27,272

27,915

23,388

24,025

2.4%

2.9%

US dollar

20,103

20,239

18,541

18,720

4.8%

5.0%

Pound sterling

4,354

4,394

4,750

4,794

6.1%

6.2%

Colombian peso

1,381

1,381

1,543

1,543

7.6%

7.6%

Brazilian real

2,412

2,458

2,074

2,114

7.4%

7.5%

Swiss franc

419

419

403

403

2.1%

2.1%

Chilean peso/UF

414

421

700

710

6.9%

7.0%

Peruvian sol

426

426

404

404

6.1%

6.1%

Russian ruble

225

227

247

247

8.5%

8.5%

Japanese yen

-

-

-

-

-

-

Other currencies

577

583

300

306

  

Total non-euro currencies

30,311

30,548

28,962

29,241

  

TOTAL

57,583

58,463

52,350

53,266

  

Long-term financial debt denominated in currencies other than the euro increased by €1,349 million. The change is largely attributable to new borrowing in US dollars and Brazilian reals.  

Change in the nominal value of long-term debt

Millions of euro

Nominal value

IFRS 16 effects

Repayments

New financing

Other changes

Exchange differences

Nominal value

 

at Dec. 31, 2018

al 01,01,2019

    

at Dec. 31, 2019

Bonds

40,809

-

(1,652)

6,349

-

539

46,045

Borrowings

12,457

1,370

(3,859)

2,550

(88)

(12)

12,418

- of which leases

657

1,370

(211)

224

(88)

12

1,964

Total financial debt

53,266

1,370

(5,511)

8,899

(88)

527

58,463

Compared with December 31, 2019, the nominal value of longterm debt at December 31, 2019 increased by €5,197 million, the net effect of €8,899 million in new borrowings, the increase in financial debt under leases of €1,370 million due to the application of the new IFRS 16, and the impact of adverse exchange rate developments in the amount of €527 million, only partly offset by repayments of €5,511 million and other changes in debt of €(88) million.

Repayments in 2019 concerned bonds in the amount of €1,652 million and borrowings totaling €3,859 million.

More specifically, the main bonds maturing in 2019 included:

  • a fixed-rate bond (equivalent to €617 million) issued by Enel SpA, maturing in June 2019;
  • a fixed-rate bond (€125 million) issued by Enel Finance International, maturing in November 2019; 
  • two bonds (equivalent to €331 million) issued by Enel Distribuição São Paulo repaid in advance as part of a liability management operations carried out by the company in June 2019. 

The main repayments of borrowings in the year included the following: 

  • €500 million in respect of loans of Enel SpA repaid in advance; 
  • €200 million in respect of bank borrowings of Endesa, of which €46 million in subsidized loans; 
  • the equivalent of €459 million in respect of bank borrowings of Enel Russia, of which €73 million in sustainable loans; 
  • €285 million in respect of sustainable loans of the Italian companies; 
  • the equivalent of €1,782 million in respect of loans of companies in South America, of which €248 million in sustainable financing. 

The main new borrowing carried out in 2019 involved bonds in the amount of €6,349 million and borrowings of €2,550 million.
The table below shows the main characteristics of financial transactions carried out in 2019.

 

Issuer/Borrower

Issue/grant date

Amount in millions of euro

Currency

Interest rate

Interest rate type

Maturity

Bonds:

       
 

Enel Finance International

21/01/2019

1,000

EUR

1.50%

Fixed rate

21/07/2025

 

Enel Finance International

10/09/2019

1,336

USD

2.65%

Fixed rate

10/09/2024

 

Enel Finance International

17/10/2019

1,000

EUR

0.00%

Fixed rate

17/06/2024

 

Enel Finance International

17/10/2019

1,000

EUR

0.375%

Fixed rate

17/06/2027

 

Enel Finance International

17/10/2019

500

EUR

1.125%

Fixed rate

17/10/2034

 

Codensa

07/03/2019

54

COP

CPI + 3.56%

Floating rate

07/03/2029

 

Codensa

07/03/2019

76

COP

6.30%

Fixed rate

07/03/2023

 

Enel Distribuição Ceará

07/03/2019

77

BRL

CDI + 0.50% p.a.

Floating rate

15/03/2023

 

Enel Distribuição Ceará

07/03/2019

66

BRL

IPCA + 4.50% p.a.

Floating rate

15/03/2024

 

Enel Distribuição Rio

12/04/2019

221

BRL

108% CDI

Floating rate

15/03/2024

 

Enel Distribuição São Paulo

28/06/2019

155

BRL

CDI + 0.80% p.a.

Floating rate

15/05/2025

 

Enel Distribuição São Paulo

28/06/2019

177

BRL

IPCA + 4.01% p.a.

Floating rate

15/05/2026

 

Enel Green Power Volta Grande

05/11/2019

116

BRL

IPCA + 3.70% p.a.

Floating rate

15/10/2029

 

Enel Green Power Volta Grande

05/11/2019

63

BRL

IPCA + 3.70% p.a.

Floating rate

15/10/2029

        

Total bonds

  

5,840

    

Bank borrowings:

       
 

Enel Distribuição Goiás

24/01/2019

129

USD

Libor 3M + 0.10%

Floating rate

29/01/2021

 

Enel Distribuição Rio

04/02/2019

89

BRL

8.40%

Fixed rate

07/02/2022

 

Endesa

19/03/2019

335

EUR

Euribor 6M + 0.45%

Floating rate

19/03/2034

 

Endesa

20/05/2019

300

EUR

Euribor 6M + 0.54%

Floating rate

10/05/2031

 

e-distribuzione

20/06/2019

250

EUR

Euribor 6M + 0.41%

Floating rate

20/06/2034

 

Enel Russia

24/07/2019

71

RUB

7.67%

Fixed rate

24/07/2020

        

Total bank borrowings

  

1,174

    

The Group’s main long-term financial liabilities are governed by covenants that are commonly adopted in international business practice. These liabilities primarily regard the bond issues carried out within the framework of the Global/Euro Medium-Term Notes program, issues of subordinated unconvertible hybrid bonds (so-called “hybrid bonds”) and loans granted by banks and other financial institutions (including the European Investment Bank and Cassa Depositi e Prestiti SpA).
The main covenants regarding bond issues carried out within the framework of the Global/Euro Medium-Term Notes program of (i) Enel and Enel Finance International NV (including the green bonds of Enel Finance International NV guaranteed by Enel SpA, which are used to finance the Group’s so-called eligible green projects) and those regarding bonds issued by Enel Finance International NV on the US market guaranteed by Enel SpA can be summarized as follows:

  • negative pledge clauses under which the issuer and the guarantor may not establish or maintain mortgages, liens or other encumbrances on all or part of its assets or revenue to secure certain financial liabilities, unless the same encumbrances are extended equally or pro rata to the bonds in question; 
  • pari passu clauses, under which the bonds and the associated security constitute a direct, unconditional and unsecured obligation of the issuer and the guarantor and are issued without preferential rights among them and have at least the same seniority as other present and future unsubordinated and unsecured bonds of the issuer and the guarantor; 
  • cross-default clauses, under which the occurrence of a default event in respect of a specified financial liability (above a threshold level) of the issuer, the guarantor or, in some cases, “significant” subsidiaries constitutes a default in respect of the liabilities in question, which become immediately repayable. 

During 2019, Enel Finance International NV issued two “sustainable” bonds on the European market (as part of the Euro Medium Term Notes - EMTN bond issue program) and on the American market, both guaranteed by Enel SpA, linked to the achievement of a number of the Sustainable Development Goals (SDGs) of the United Nations that contain the same covenants as other bonds of the same type.

The main covenants covering Enel’s hybrid bonds can be summarized as follows:

  • subordination clauses, under which each hybrid bond is subordinate to all other bonds issued by the company and has the same seniority with all other hybrid financial instruments issued, being senior only to equity instruments; 
  • prohibition on mergers with other companies, the sale or leasing of all or a substantial part of the company’s assets to another company, unless the latter succeeds in all obligations of the issuer. 

The main covenants envisaged in the loan contracts of Enel and Enel Finance International NV and the other Group companies can be summarized as follows:

  • negative pledge clauses, under which the borrower and, in some cases, the guarantor are subject to limitations on the establishment of mortgages, liens or other encumbrances on all or part of their respective assets, with the exception of expressly permitted encumbrances; 
  • disposals clauses, under which the borrower and, in some cases, the guarantor may not dispose of their assets or operations, with the exception of expressly permitted disposals; 
  • pari passu clauses, under which the payment undertakings of the borrower have the same seniority as its other unsecured and unsubordinated payment obligations; 
  • change of control clauses, under which the borrower and, in some cases, the guarantor could be required to renegotiate the terms and conditions of the financing or make compulsory early repayment of the loans granted; 
  • rating clauses, which provide for the borrower or the guarantor to maintain their rating above a certain specified level;
  • cross-default clauses, under which the occurrence of a default event in respect of a specified financial liability (above a threshold level) of the issuer or, in some cases, the guarantor constitutes a default in respect of the liabilities in question, which become immediately repayable. 

In some cases the covenants are also binding for the significant companies or subsidiaries of the obligated parties. All the financial borrowings considered specify “events of default” typical of international business practice, such as, for example, insolvency, bankruptcy proceedings or the entity ceases trading.
In addition, the guarantees issued by Enel in the interest of e-distribuzione SpA for certain loans to e-distribuzione SpA from Cassa Depositi e Prestiti SpA require that at the end of each six-month measurement period that Enel’s net consolidated financial debt shall not exceed 4.5 times annual consolidated EBITDA.
Finally, the debt of Enel Américas SA, Enel Chile SA and the other Latin American subsidiaries (notably Enel Generación Chile SA) contain covenants and events of default typical of international business practice, which had all been complied with as at December 31, 2019.

The following table reports the impact on gross long-term debt of hedges to mitigate exchange risk

Long-term financial debt by currency after hedging

Millions of euro

at Dec. 31, 2019

at Dec. 31, 2018

 

Initial debt structure

Impact of hedge

Debt structure after hedging

Initial debt structure

Impact of hedge

Debt structure after hedging

 

Carrying amount

Nominal amount

%

   

Carrying amount

Nominal amount

%

   

Euro

27,272

27,915

47.8%

20,218

48,133

82.3%

23,388

24,025

45.0%

18,901

42,926

80.6%

US dollar

20,103

20,239

34.6%

(16,445)

3,794

6.5%

18,541

18,720

35.1%

(15,064)

3,656

6.9%

Pound sterling

4,354

4,394

7.5%

(4,394)

-

-

4,750

4,794

9.0%

(4,794)

-

-

Colombian peso

1,381

1,381

2.4%

-

1,381

2.4%

1,543

1,543

2.9%

-

1,543

2.9%

Brazilian real

2,412

2,458

4.2%

968

3,426

5.9%

2,074

2,114

4.0%

1,207

3,321

6.2%

Swiss franc

419

419

0.7%

(419)

-

-

403

403

0.8%

(403)

-

-

Chilean peso/UF

414

421

0.7%

-

421

0.7%

700

710

1.3%

-

710

1.3%

Peruvian sol

426

426

0.7%

-

426

0.7%

404

404

0.8%

-

404

0.8%

Russian ruble

225

227

0.4%

-

227

0.4%

247

247

0.5%

73

320

0.6%

Other currencies

577

583

1.0%

72

655

1.1%

300

306

0.6%

80

386

0.7%

Total non-euro currencies

30,311

30,548

52.2%

(20,218)

10,330

17.7%

28,962

29,241

55.0%

(18,901)

10,340

19.4%

TOTAL

57,583

58,463

100.0%

-

58,463

100.0%

52,350

53,266

100.0%

-

53,266

100.0%


The amount of floating-rate debt that is not hedged against interest rate risk is the main risk factor that could impact the income statement (raising borrowing costs) in the event of an increase in market interest rates.

Millions of euro

2019

2018

 

Pre-hedge

%

Post-hedge

%

Pre-hedge

%

Post-hedge

%

Floating rate

17,113

27.4%

12,208

19.6%

17,175

30.2%

12,983

22.8%

Fixed rate

45,314

72.6%

50,219

80.4%

39,735

69.8%

43,927

77.2%

Total

62,427

 

62,427

 

56,910

 

56,910

 

 

At December 31, 2019, 27.4% of financial debt was floating rate (30.2% at December 31, 2018). Taking account of hedges of interest rates considered effective pursuant to the IFRSEU, 19.6% of net financial debt at December 31, 2019 (22.8% at December 31, 2018) was exposed to interest rate risk. Including interest rate derivatives treated as hedges for management purposes but ineligible for hedge accounting, 80% of net financial debt was hedged (77% hedged at December 31, 2018).

These results are in line with the limits established in the risk management policy.

43.3.2 Short-term borrowings - €3,917 million

At December 31, 2019 short-term borrowings amounted to €3,917 million, an increase of €301 million on December 31, 2018. They break down as follows.

Millions of euro

   
 

at Dec. 31, 2019

at Dec. 31, 2018

Change

Short-term bank borrowings

579

512

67

Commercial paper

2,284

2,393

(109)

Cash collateral and other financing on derivatives

750

301

449

Other short-term borrowings (1)

304

410

(106)

Short-term borrowings

3.917

3,616

301

(1) Does not include current financial debt included in other current financial liabilities.

Short-term bank borrowings amounted to €579 million. Commercial paper amounted to €2,284 million, issued by Enel Finance International, Enel Finance America, Endesa and a number of South American companies.
The main commercial paper programs include:

  • €6,000 million of Enel Finance International guaranteed by Enel SpA; 
  • €3,000 million of Endesa; 
  • $3,000 million (equivalent to €2,671 million at December 31, 2019) of Enel Finance America.