Financial Management of the Group

The financial management of the Bayer Group is conducted by Bayer AG. Capital is a global resource, generally procured centrally and distributed within the Group. The foremost objectives of our financial management are to help bring about a sustained increase in corporate value and to ensure the Group’s liquidity and creditworthiness. This involves optimizing the capital structure and effectively managing risks. The management of currency, interest-rate, commodity price and default risks helps to reduce the volatility of our earnings.

The contracted rating agencies assess Bayer as follows:

Rating

 

 

Long-term rating

 

Short-term rating

S & P Global Ratings

 

A–

 

A–2

Moody's

 

A3

 

P–2

These credit ratings reflect the company’s high solvency and ensure access to a broad investor base for financing purposes. As a result of the agreed acquisition of Monsanto, both S&P Global Ratings and Moody’s are reviewing the possibility of a downgrade. Bayer continues to aim for an investment-grade credit rating after the successful closing of the Monsanto acquisition and is aiming for the single “A” rating category in the long term.

As a matter of principle, we pursue a prudent debt management strategy to ensure flexibility, drawing on a balanced financing portfolio. This is fundamentally based on bonds in various currencies, Syndicated credit facility Credit line agreed with a group of banks; generally used for extensive financing requirements, such as when making an acquisition, to increase available liquidity or as security for the issuance of debt instruments. The credit facility can be utilized and repaid flexibly, either in full or in portions, during its term. , bilateral loan agreements and a Global commercial paper program Commercial paper (CP) issued under Bayer’s program is a short-term, unsecured debt instrument normally issued at a discount and redeemed at nominal value. It is a flexible way of obtaining short-term funding on the capital market. Bayer’s commercial paper program allows the company to issue commercial paper on both the U.S. and European markets. .

We use financial derivatives to hedge against risks arising from business operations or financial transactions, but do not employ contracts in the absence of an underlying transaction. It is our policy to diminish default risks by selecting trading partners with a high credit standing. We closely monitor the execution of all transactions, which are conducted in accordance with Group policies.