Yesterday Daimler AG (ticker DAI) concluded a syndicated credit line with a group of international banks for of €11 billion. The credit line has a term of five years with two extension options. It is said to give the company financial flexibility until the year 2025. Because of “ the favorable market environment, the existing credit line was extended prematurely.” (translation Daimler paid too much.) The transaction was concluded on improved terms and was significantly oversubscribed, thereby proving once again that banks prefer to lend to people and institutions that don’t really need to borrow. Because of the favorable credit environment and Daimler’s good credit rating, the commitment fee to be paid for the new credit line is lower despite its higher volume.
“The strong demand for this credit line and the attractive conditions for us show that Daimler enjoys a high reputation in the banking world and that the banks trust our strategy and the further development of the company,” according to Bodo Uebber, Member of the Board of Management of Daimler AG responsible for Finance & Controlling and Daimler Financial Services. (Maybe they should add that he is also responsible for “stating the Obvious” to his title.)
The broad-based consortium of more than 40 banks from Europe, Asia and America reflects the global orientation of Daimler’s business. However, Daimler does not plan to use the credit line now. It serves solely to secure sufficient financial flexibility always. (translation: Don’t hurt our stock price, we are not going on a spending orgy like a drunken sailor.) By signing this agreement, Daimler terminated the existing €9 billion syndicated credit line ahead of schedule.