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FINANCIAL AND ACCOUNTING INFORMATION
1. 2016 Consolidated Financial Statements
241
SAINT-GOBAIN
- REGISTRATION DOCUMENT 2016
FINANCING AND FINANCIAL INSTRUMENTS
NOTE 8
Risk factors: financial risks
8.1
Liquidity risk
8.1.1
Liquidity risk on financing
a)
In a crisis environment, the Group might be unable to raise
plans on the credit or capital markets, or to obtain such
the financing or refinancing needed to cover its investment
financing or refinancing on acceptable terms.
de Saint-Gobain or with the National Delegations’ cash pools.
long-term financing arrangements with Compagnie
managed by the Treasury and Financing Department of
Except in special cases, the subsidiaries enter into short- or
Compagnie de Saint-Gobain, the Group’s parent company.
The Group’s overall exposure to liquidity risk on its net debt is
be rolled over at maturity and to optimize borrowing costs.
The Group’s policy is to ensure that the Group’s financing will
percentage of overall debt. At the same time, the maturity
Long-term debt therefore systematically represents a high
schedules of long-term debt are set in such a way that
replacement capital market issues are spread over time.
bank borrowings and lease financing.
participating securities, a long-term securitization program,
The Group’s main source of long-term financing is bonds,
program. Saint-Gobain also uses perpetual bonds,
which are generally issued under the Medium Term Notes
and bank financing. Financial assets comprise marketable
securities and cash and cash equivalents.
Negotiable European Commercial Paper (NEU CP), and
Short-term debt is composed of borrowings under
Paper, but also includes receivables securitization programs
occasionally Euro Commercial Paper and US Commercial
Compagnie de Saint-Gobain’s liquidity position is secured by
confirmed syndicated lines of credit.
characteristics of the Group’s financing programs and
maturity is provided in Note 8.3, which also details the main
confirmed credit lines.
A breakdown of long- and short-term debt by type and
Saint-Gobain’s long-term debt issues have been rated BBB
with a stable outlook by Standard & Poor’s since December 9,
2014.
Saint-Gobain’s long-term debt issues have been rated Baa2
with a stable outlook by Moody’s since December 9, 2014.
interest on future borrowings.
capacity to raise funds and could lead to higher rates of
There is no guarantee that the Company will be in a position
deterioration in the Group’s credit risk rating could limit its
to maintain its credit risk ratings at current levels. Any
Liquidity risk on investments
b)
fund units. To reduce liquidity and volatility risk, whenever
funds.
possible, the Group invests in money market and/or bond
Short-term investments consist of bank deposits and mutual
Market risks
8.1.2
Interest rate risks
a)
subsidiaries use derivatives to hedge interest rate risks, their
Department of Compagnie de Saint-Gobain. Where
counterparty is generally Compagnie de Saint-Gobain, the
consolidated debt is managed by the Treasury and Financing
The Group’s overall exposure to interest rate risk on
Group’s parent company.
The Group’s policy is aimed at fixing the cost of its
borrowing costs. According to Group policy, the derivative
medium-term debt against interest rate risk and optimizing
interest rate swaps, cross-currency swaps, options - including
financial instruments used to hedge these risks can include
caps, floors and swaptions - and forward rate agreements.
interest rate on the Group’s net debt after hedging:
pre-tax income and pre-tax equity to fluctuations in the
The table below shows the sensitivity at December 31, 2016 of
(in € millions)
Impact on pre-tax
income
equity
Impact on pre-tax
50 basis points
Interest rate increase of
12
1
50 basis points
Interest rate decrease of
(12)
(1)
Note 8.4 to the consolidated financial statements provides a
gross debt by rate type (fixed or variable) after hedging.
breakdown of interest rate risk hedging instruments and of