Debt

Debt structure

 

The debt of Royal Philips consists of bonds (USD and EUR), forward contracts, leases (finance and operating) and bank borrowings. Next to that, Philips’ has a EUR 1 billion committed revolving credit facility which was signed in April 2017 and will expire in April 2024. The facility can be used for general group purposes, such as a backstop of its Commercial Paper Program.

 

The Commercial Paper Program amounts to USD 2.5 billion, under which Philips can issue commercial paper up to 364 days in tenor, both in the US and in Europe, in any major freely convertible currency. As per end of Q1 2021 there was no amount outstanding under the program.

 

The total net debt of Philips per March 31st, 2021 is EUR 6.6 billion. The long-term debt has maturities up to 2042 and an average tenor of 8.0 years. The graph below shows the debt maturity profile, per end of March 2021:

Debt maturity profile as per 31 March 2021
Debt maturity profile - long term debt - short term debt unutilized standby and other committed facilities forward share repurchases
  1. Short-term debt includes local credit facilities that are being rolled forward on a continuous basis; 2 Debt includes forward transactions entered into as part of share repurchase programs for share cancellation and LTI purposes; 3 Based on long-term debt only, excludes short-term debt and forward share repurchases for share cancellation and LTI purposes.
     

The Net debt:Group equity ratio provides insight in the financial strength of Philips. This measure is used by Philips management and investment analysts to evaluate financial strength and funding requirements.

Net debt: Group equity
In billions of EUR
Net debt group equity
The Net debt: Group equity ratio may be subject to limitations because cash and cash equivalents are used for various purposes, not only debt repayment. The net debt calculation deducts all cash and cash equivalents whereas these items are not necessarily available exclusively for debt repayment at any given time.

Bonds

The profile of the outstanding bonds is reflected in the table below

Bonds

In millions of EUR unless otherwise stated

Outstanding bonds
Interest rate
Issue date
Maturity
ISIN Code
Final terms
EUR 500 million
0.500%
2017
2023
XS1671760384
EUR 500 million
0.750%
2018
2024
XS1815116568
EUR 500 million
1.375%
2020
2025
XS2149368529
USD 84 million
7.125%
1995
2025
US718337AB40
USD 63 million
7.750%
1995
2025
US718337AC23
EUR 750 million
0.500%
2019
2026
XS2001175657
USD 137 million
7.200%
1996
2026
US718337AC23
EUR 500 million
1.375%
2018
2028
XS1815116998
EUR 500 milllion
2.000%
2020
2030
XS2149379211
USD 726 million
6.875%
2008
2038
US500472AC95
USD 500 million
5.000%
2012
2042
US500472AE51
In addition to the bonds, Philips has a fully drawn subordinated loan of EUR 200 million in place with final maturity in 2025.

ESG Framework

Philips launched a dual Green and Sustainability Innovation Bond program to finance its sustainability activities. The Bonds under the program follow the International Capital Market Association (ICMA) Green Bond Principles 2018 (GBP)1, Social Bond Principles 2018 (SBP)2 and the ICMA Sustainability Bond Guidelines 2018 (SBG)3, and have been verified by Sustainalytics.

 

Philips can issue Bonds under the combined Green and Sustainability Innovation Bond Framework and will label the Bonds as either “Green Innovation Bonds” or “Sustainability Innovation Bonds” accordingly.

Euro Medium-Term Note (EMTN)

As per 9 March 2020, Koninklijke Philips N.V. has established a Euro Medium-Term Note (EMTN) programme, which framework facilitates the issuance of notes for a total amount of up to €10 billion.

Standby facility

Key terms and conditions revolving credit facility
Borrower
Royal Philips
Facility amount
EUR 1.0 billion
Purpose
  • General corporate purposes
  • Backstop for commercial paper program
Maturity
April 2024
Financial ratio covenants
None
MAC clauses
None

Credit rating

Royal Philips’ existing long-term debt is rated A- (with stable outlook) by Fitch, Baa1 (with stable outlook) by Moody’s, and BBB+ (with stable outlook) by Standard & Poor’s. As part of the capital allocation policy, the net debt position is managed with the intention of retaining a strong investment grade credit rating.
Agency
Long-term
Short-term
Outlook
Rating Agency report
Fitch
A-
-
Stable
Moody's
Baa1
P - 2
Stable
Standard & Poor's
BBB+
A - 2
Stable
Ratings are subject to change at any time and there is no assurance that Philips will be able to achieve this goal.

Contact Investor Relations

Leandro Mazzoni

Leandro Mazzoni

Head of Investor Relations

Derya Guzel

Derya Guzel

Investor Relations Manager

Monique van der Heiden

Monique
van der Heiden

Executive Assistant

For any other matters not directly related to Investor Relations, please visit our company contacts page.