Note 21: Net debt

AkzoNobel’s net debt is mainly denominated in euro.

Long-term borrowings

We have a multi-currency revolving credit facility of €1.3 billion which was extended in 2021 to 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 2021 and 2020, this facility has not been drawn.

The part of long-term borrowings that is due within one year is presented under short-term borrowings. 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 and short-term borrowings at year-end 2021 was 1.9% (year-end 2020: 1.9%).

The blended incremental borrowing rate applied to the lease liabilities at year-end 2021 was 1.8% (2020: 1.9%).

At year-end 2021 and 2020, none of the borrowings was secured by collateral.

Short-term borrowings

In July 2022, a bond of €750 million will mature. This bond is classified as a short-term borrowing. 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 €371 million commercial paper outstanding at year-end 2021 (2020: €nil) against an average negative interest rate of 0.5%. At year-end 2021, we had a €300 million short-term bank loan outstanding (2020: €nil) against a negative interest rate of 0.6%. Neither of these facilities contains 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, 2021, an amount of €14 million in cash and cash equivalents was restricted (2020: €14 million). Restricted cash is defined as cash that cannot be accessed centrally due to regulatory or contractual restrictions.