Debt Financing

This section illustrates the Group’s solid finances, in particular with information on our debt structure and financing strategy.

Financing Policy

An internationally recognized signature allows AccorHotels to raise various forms of financing, including through bond issues, private placements and bank loans. From time to time, the Group also takes advantage of market opportunities to raise financing in a given currency and at a given rate of interest and then use a swap to convert the facility into the currency and interest rate required to finance business needs.

Generally, the Group’s policy is to finance its assets and operating requirements in the currency of the country concerned in order to create a natural hedge and avoid any currency risk. By using its subsidiaries’ surplus cash as well as the financial instruments described above, the Group is able to optimize the cost of its resources while reducing currency risks.

Debt structure

On July 2nd, 2018, AccorHotels has signed a €1,200 million Revolving Credit Facility.  This credit facility has a five-year tenor with 2 one-year extension options to be exercised in 2019 and 2020. Moreover, the margin is dependent on the Group’s performance in terms of Environment, Social and Governance (ESG).

For this revolving credit facility, the acceleration clause can be triggered if the Group does not comply with the leverage ratio covenant (consolidated net debt to consolidated EBITDA).

At December 31, 2018, 86% of long and short-term debt was fixed rate, with an average rate of 1.79%, and 14% was variable rate, with an average rate of 2.17%.

At December 31, 2018, fixed rate debt was denominated primarily in Euro (50%), in Australian dollar (31%), in US dollar (7%). While variable rate debt was denominated mainly in euro (70%), in Polish zloty (27%) and in Mauritian rupee (3%). At December 31, 2018, maturities of long and short-term debt were as follows:

• Due within one year: 12%
• Due in 1-2 years: 3%
• Due in 3-5 years: 56%
• Due in 6 years and beyond: 29%

Ratings

Credit ratings assess the credit worthiness of the Group and its ability to pay its debt.

AccorHotels is followed by the credit rating agencies Standard & Poor’s and Fitch Ratings which asign to AccorHotels the following rating (last update in March 2018):

• Standard & Poor’s: BBB- with outlook stable
  
• Fitch Ratings: BBB- with outlook stable