Debt Q & A

Find answers to the most important questions about debt.

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  • What is a credit rating? Does SAP have a credit rating?

    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. Credit ratings are especially interesting for companies issuing corporate bonds on the capital market in order to gain additional liquidity in the form of debt.

    SAP does not have a credit rating from rating agencies such as Standard & Poor's or Moody's.

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  • Why doesn’t SAP have an official rating? Is it planned to obtain one?

    Based on the strong corporate financial profile (among others, an equity ratio of 58% as of December 31, 2013, as well as a strong and recurring Free Cash Flow) and the excellent capital market reputation SAP has successfully realized external financing transactions without an external rating.

    However, we will continue to closely monitor our financing situation in relation to the rating issue.

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  • Can you briefly describe your approach for the financing of your business units or subsidiaries?

    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.

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  • Do you have defined a Financial Leverage Target for SAP? How do you make sure that your most important financial key figures do not significantly deteriorate in case of larger acquisitions?

    A long-term and mutually beneficial business relationship with our customers is fundamental for the success of SAP’s business model. It is of vital importance for us to maintain a strong financial profile with a low financial leverage ratio at all times. Thereby, we want to secure trust of our customers in the long-term availability of SAP’s products and services as well as in our innovative strength to add value to our customers. Moreover, our company operates in a growth market. Therefore continuous access to debt capital markets is essential in order to seize growth opportunities as they arise.

    We target to maintain an implicit solid investment grade rating. In case of a larger acquisition we will try to limit the impact on the most important financial key figures and to keep them in the investment grade area. We are also very careful that our creditworthiness is on the same level as that of our main competitors.

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  • Which role do considerations on capital structure optimization play for your future financing strategy?

    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.

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  • What is your Bank Relationship Management approach?

    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.

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  • How do you monitor the creditworthiness of your business partners in the bank sector?

    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.

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  • What credit facilities do you currently have?

    We currently have a syndicated revolving credit facility in the amount of EUR 2.0bn (maturity in November 2018 with two 1-year extension options). 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 486m as of December 31, 2013 (EUR 489m as of December 31, 2012). As at December 31, 2013, there were no borrowings outstanding under these credit facilities, neither from SAP AG nor any of our subsidiaries.

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  • How did you finance the SuccessFactors acquisition?

    We financed SuccessFactors by utilizing parts of our existing liquidity and by arranging an acquisition term loan with J.P. Morgan (Mandated Lead Arranger) in the amount of EUR 1bn in December 2011. The term loan was successfully syndicated with 10 additional banks in January 2012. In February 2012, we drew the full loan amount and repaid it completely in November 2012.

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  • How did you finance the Ariba acquisition?

    Besides utilizing parts of our existing liquidity we took out a EUR 2.4bn acquisition term loan with Deutsche Bank AG and J.P. Morgan (Mandated Lead Arrangers) in May 2012. The term loan was successfully syndicated with 4 additional banks in June 2012. Due to the favorable debt capital market environment we issued a two-tranche Eurobond (EUR 1.3bn) and a U.S. private placement (USD 1.4bn). With these two transactions we added different maturities ranging from 3 to 15 years in order to extend and optimize our maturity profile. We used the cash inflows to completely repay the Ariba term loan in December 2012.

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  • What are your current plans with the bond and the private placement maturing in 2014?

    The EUR 500m bond and the EUR 86m private placement (Schuldschein), both maturing in April 2014, are intended to be repaid in full. Currently there are no plans to refinance the volumes at maturity.

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  • What role do the current market turbulences play with regard to SAP’s financial situation?

    To a very large extent we have concentrated our liquidity at SAP AG. 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.

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  • How did you finance the hybris acquisition?

    A term loan in the amount of EUR 1bn and a maturity of 1 year was arranged. The credit facility was provided to SAP by Deutsche Bank and was syndicated among 12 additional banks. The loan was fully repaid in December 2013.

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