Note 21: Net debt

AkzoNobel’s net debt is mainly denominated in euro.

Multi-currency revolving credit facility

We have a multi-currency revolving credit facility of €1.3 billion which runs until 2026. This facility does not contain financial covenants or acceleration provisions that are based on adverse changes in ratings or material adverse change. At year-end 2022 and 2021, this facility has not been drawn.

Long-term borrowings

In March 2022, two bonds were issued with nominal values of €600 million each, of which one at a coupon rate of 1.5%, maturing in 2028 and one at a coupon rate of 2.0%, maturing in 2032. For details on the exposure to interest rate and foreign currency risk, refer to Note 27.

The average effective interest rate of the bonds included in long-term borrowings at year-end 2022 was 1.6% (year-end 2021: 1.9%).

The increase in Other long term borrowings is related to loans included in the balance sheet of acquired companies and acquisition related financing.

The blended incremental borrowing rate applied to the lease liabilities at year-end 2022 was 1.9% (2021: 1.8%).

At year-end 2022 and 2021, none of the borrowings was secured by collateral.

Short-term borrowings

The current portion of long-term borrowings decreased mainly due to the maturing of a €750 million bond in July 2022.

Debt to credit institutions includes our commercial paper program. We have US dollar and euro commercial paper programs in place, which can be used to the extent that the equivalent portion of the €1.3 billion multi-currency revolving credit facility is not used. We had €1.3 billion commercial paper outstanding at year-end 2022 (2021: €371 million) against an average interest rate of 1.6% (2021: 0.5% negative). At year-end 2022, we had short-term bank loans outstanding of €1.1 billion (2021: €300 million) against a 3-months Euribor plus a mark-up (2021: 0.6% negative). None of these facilities contain financial covenants.

Short-term investments

Short-term investments almost entirely consist of time deposits, money market funds and other marketable securities with a life time at investment date longer than three months but shorter than twelve months. For more information on credit risk management, refer to Note 27.

Cash and cash equivalents

Deposits and money market funds within cash and cash equivalents almost entirely consist of time deposits immediately convertible into known amounts of cash and with a maturity of three months or less from the date of purchase, and marketable securities that can be redeemed immediately when called.

At December 31, 2022, an amount of €11 million in cash and cash equivalents was restricted (2021: €14 million). Restricted cash is defined as cash that cannot be accessed centrally due to regulatory or contractual restrictions.