Find answers to the most important questions about debt.
A credit rating is a qualified assessment and formal evaluation of a company's creditworthiness, ability and willingness of repaying outstanding debt obligations on time.
SAP has a long-term issuer credit rating of “A2” by Moody's and “A” by Standard & Poor's.
During the last few years, SAP has been active in the debt capital markets. Based on its strong financial profile, track record of fast debt repayments and proactive liquidity management, the Company has established a very strong reputation with debt investors.
While SAP has continuously realized successful financing transactions at attractive terms, an external rating could provide SAP with the opportunity to broaden investor access and to optimally benefit from its high creditworthiness. An external rating provides investors, customers and suppliers with an independent view of SAP’s strength and stability as a business partner.
We apply a centralized financial management, i.e. financial resources should be raised and invested centrally whenever possible. Therefore, subsidiaries are financed by intercompany loans and/ or cash pooling agreements according to their needs.
For SAP, sufficient liquidity always has highest priority. We are aware that an optimized capital structure with a higher financial leverage and lower cash levels might imply a slight reduction in the cost of capital. However, in the current environment a proper liquidity level with moderate gross debt is more important to us. Moreover, our company operates in growth markets. Therefore continuous access to debt capital markets is essential in order to seize growth opportunities as they arise.
The bank relationship policy of SAP targets a long-term and mutually beneficial business relationship. Bank partners who support us with significant credit amounts make up our core bank group. Within this group we allocate treasury-related business on a competitive basis. Moreover, we take into account the respective core competencies and abilities of each individual bank.
Besides the credit ratings we also look into the development of the CDS spreads and the share price of the banks on a daily basis. Moreover, a counterparty limit has been assigned to each bank partner. We have defined a detailed contingency plan which stipulates specific measures to be undertaken in case of a sudden and significant deterioration in the creditworthiness of our bank partners.
We currently have a syndicated revolving credit facility in the amount of EUR 2.0bn (maturity in November 2019 with another 1-year extension option). The facility includes 27 banks and strengthens our financial flexibility. The credit facility can be used for general corporate purposes and supplements our existing bilateral credit facilities. The credit facility has not been drawn so far and currently we do not intend to do so. Additionally, SAP has available bilateral credit facilities in the amount of EUR 471m as of December 31, 2014 (EUR 486m as of December 31, 2013). As at December 31, 2014, there were no borrowings outstanding under these credit facilities, neither from SAP SE nor any of our subsidiaries.
To a very large extent we have concentrated our liquidity at SAP SE. It is distributed among a large number of counterparties and invested almost completely short-term. The liquidity reserve has a high priority for SAP. We have a daily overview of the group liquidity and follow a very conservative approach on the investment side by using only standard instruments and short maturities.