Debt sources of financing
The Swedish Match Group’s sources of financing mainly comprise of shareholders’ equity, cash flow from current operations, and borrowing.
Swedish Match policy is that the average interest maturity should be less than 5 years. The Group´s objective for interest rate fixing is to achieve an even and low cost of interest.
The average interest cost for outstanding bonds (including derivative instruments) on December 31, 2020 was 2.1 percent (2.1). The average interest maturity period for Group loans was 3.7 years (3.7 years), taking into account cross currency interest rate swaps. The interest maturity structure on December 31, 2020 was as follows:
| Year | Fixed loans, MSEK | Variable loans, MSEK | Total, MSEK |
|---|---|---|---|
| 2021 | 1,849 | – | 1,849 |
| 2022 | 1,401 | – | 1,401 |
| 2023 | 1,722 | 450 | 2,172 |
| 2024 | 3,008 | – | 3,008 |
| 2025 | 2,522 | – | 2,522 |
| 2026– | 4,411 | – | 4,411 |
| Total | 14,913 | 450 | 15,363 |
Swedish Match applies a centralized approach to the Group’s financing, whereby as much external borrowing as possible is conducted centrally. Subsidiary borrowing can, however, take place in countries where regulations and taxes make central financing impossible or uneconomical. Swedish Match tries to limit its refinancing risk by having a good distribution and length on its gross borrowing, and not being dependent on individual sources of financing.
Swedish Match has a syndicated bank credit facility of committed 1,500 MSEK, which matures in December 2022. This was unutilized at year-end and contained no financial covenants. It is defined as a reserve facility. At year-end 2020, available cash funds and committed credit facilities amounted to 4,911 MSEK. Of this amount, confirmed credit lines amounted to 1,500 MSEK and cash and cash equivalents making up the remaining 3,411 MSEK. All cash and cash equivalents are available for use, none of this is pledged or similar.
Most of Swedish Match’s financing consists of a global medium-term note program (MTN) with a limit amount of 2,000 MEUR. The program is an uncommitted borrowing program and the availability could be limited by the Group’s creditworthiness and prevailing market conditions. In case of market stress, if this program cannot be efficiently used, the syndicated bank credit facility of 1,500 MSEK will be utilized if necessary. At December 31, 2020, a total of 15,368 MSEK of the global medium-term note program was outstanding. The average maturity of the Group’s bond borrowing at December 31, 2020 was 3.8 years.
Swedish Match’s undiscounted cash flows regarding sources of loans and lease liabilities, including interest payments, negative derivatives (derivatives with positive market values are excluded), accrued interest, trade payables and their maturity profiles are distributed as follows:
| Year | Other financial liabilities incl. Interest, MSEK | Negative derivatives, MSEK | Trade payables, MSEK | Total value, MSEK | Total booked value, MSEK |
|---|---|---|---|---|---|
| 2022 | 1,317 | 33 | 464 | 1,814 | 1,599 |
| 2023 | 2,526 | 34 | 2,560 | 2,354 | |
| 2024 | 3,273 | 31 | 3,304 | 3,140 | |
| 2025 | 3,240 | 33 | 3,273 | 3,157 | |
| 2026 | 2,133 | 30 | 2,163 | 2,064 | |
| 2027– | 4,035 | 136 | 4,171 | 3,947 | |
| Total | 16,524 | 297 | 464 | 17,285 | 16,261 |
Under the global MTN program, Swedish Match has issued bonds in SEK, EUR, USD and CHF. Borrowing in EUR, USD and CHF is hedged into SEK by cross currency interest rate swaps.
Read more about debt programs.
