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 Bayer Group. The foremost objectives of our financial management are to help bring about a sustained increase in corporate value and to ensure the Bayer 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 revised their ratings following the acquisition of Monsanto and now assess Bayer as follows:

Rating

 

 

Long-term rating

 

Short-term rating

 

Outlook

S & P Global Ratings

 

BBB

 

A2

 

stable

Moody’s

 

Baa1

 

P2

 

negative

Fitch Ratings

 

A–

 

F2

 

stable

These investment grade ratings from all three agencies reflect the company’s high solvency and ensure access to a broad investor base for financing purposes. Our stated aim is to also achieve A-category long-term ratings from S & P Global Ratings and Moody’s.

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 facilities, 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 Bayer Group policies.

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