Air Liquide reviews the Group’s financing strategy on a regular basis to provide support to its growth objectives and take into account changes in financial market conditions, all while respecting a credit profile in line with a “A” range minimum Standard & Poor’s and Moody’s long term rating. Following the acquisition of Airgas the long term rating of Air Liquide was downgraded as expected from “A+” to “A-” by Standard & Poor’s. Air Liquide also took the opportunity to add a second long term rating by Moody’s who granted a “A3” rating. Both agencies also removed their negative credit watch and set a stable outlook. This rating downgrade does not impact the Group’s financial policy.
Air Liquide’s financing principles
Our financing strategy consists in the following principles:
Diversification of funding sources and debt maturities to minimize refinancing risk
Backing of commercial paper issues with solid lines of credit
Hedging of interest rate risks to ensure visibility of funding costs in line with long-term investment decisions
Funding investments in the currency of operating cash flows to ensure a natural foreign exchange hedge
Centralizing excess cash through Air Liquide Finance, a wholly owned entity of Air Liquide S.A.
A well balanced mix of funding sources and maturities
Air Liquide diversifies its financing sources by accessing various debt markets. In the long run, the Group funds itself with bond issues, usually though its Euro Medium-Term Notes programme (EMTN), targeting European, American, as well as Chinese markets. Over the short term, Air Liquide has recourse to Negotiable European Commercial Paper (NEU CP) and US Commercial Paper. The Group has also access to a securitization programme as well as a Syndicated Credit Facility and several bilateral credit facilities with the Group’s core banking partners for general corporate purposes.
A broad range of financing tools at our disposal
In certain special circumstances, (for instance: regulatory constraints, high country risk or partnership), the Group reduces its exposure by setting up a specific funding for its subsidiaries with local bank market.
Air Liquide diversifies its funding sources and spreads maturities over several years to minimize refinancing risks related to debt repayment schedules.
Additionally, the Group’s operations generate a regular cash flow that helps to reduce these risks.
At the end of 2017, the average maturity of the Group’s debt was 6.2 years, stable as compared to 2016.