23. Borrowings

The fair value is estimated by discounting the future contractual cash flows at current market interest rates available to the borrower for similar financial instruments. For loans that are actively traded in a public market the quoted prices are used to calculate the fair value.

Schiphol Group has a Euro Medium Term Note (EMTN) programme, making it possible at present to raise funds of up to 3.0 billion euros as required, provided the prospectus is updated annually. The prospectus was updated in 2018. The covenants of the EMTN programme provision that a 'change of control' in combination with a 'downgrade below investment grade' triggers early redemption. There was no obligation to do so in 2018.

At year-end 2018, borrowings under the programme totalled 1,839 million euros (31 December 2017: 1,363 million euros). In 2018 Schiphol Group issued 500 million euros in green bonds to invest in the sustainability of its airports. The senior unsecured bonds are due 5 November 2030 and carry an annual coupon of 1.5%.

Schiphol Group has two facility agreements with the European Investment Bank for a total of 550 million euros, which have been drawn in full (and of which 67.5 million euros has since been repaid). Schiphol Group could be obliged to redeem the loan early if (in addition to the usual circumstances) other loans are repaid early or equity declines below 30% of total assets. Additional security will be demanded if the credit rating drops to BBB or lower (S&P) or to Baa2 or lower (Moody’s). The loan agreement also contains a ‘change of control’ clause.

Schiphol Group entered into an agreement with KfW IPEX-Bank for a facility of 100 million euros, which was fully drawn in 2014 and has a maturity of ten years. Schiphol Group has issued two Schuldschein notes (fixed-interest loans with terms of seven and ten years) with a nominal value of 61 million euros (31 December 2017: 61 million euros). Both notes will be redeemed in the first half of 2019. In principle, the Schuldschein documentation includes the same covenants as the EMTN programme.

In 2017 Schiphol Group entered into a new agreement with the European Investment Bank for a total facility of 350 million euros to finance the development of the new pier and terminal, comprising a committed tranche of 175 million euros and an uncommitted tranche of 175 million euros. In addition, Schiphol Group has a Euro-Commercial Paper (ECP) programme with a limit of 750 million euros. As per 31 December 2018 no use has been made of these two facilities.

Borrowings under the EMTN programme, the ECP programme, the EIB facility and the KfW facility are not subordinate to other liabilities.

Schiphol Group has access to a 300 million euro syndicated and committed facility with a term to June 2022. Schiphol Group also has access to a bilateral committed facility of 100 million euros agreed with Bank Nederlandse Gemeenten with a maturity to 1 January 2020. In addition, Schiphol Group holds two bilateral uncommitted facilities of 75 million euros each. Eindhoven Airport has a facility for 36 million euros, of which 12 million euros had been drawn as at 31 December 2018.

Of the total loans, an amount of 158.7 million euros has been drawn in Japanese yen (JPY 20 billion). In line with the financial risk management policy, a combined cross-currency swap has been contracted on the JPY loan to hedge the exchange rate risks relating to this loan. In principle, the transactions concerned correspond to all relevant characteristics of the respective loans, such as maturity and amount, and hedge the positions with respect to the euro and/or fixed interest rates. All hedging transactions are accounted for as cash flow hedges and are fully effective.

The current portion of borrowings at 31 December 2018 of 200.7 million euros (31 December 2017: 35.2 million euros) is recognised under current liabilities.

In 2018 Schiphol Group met the agreed covenants included in the various contracts.

The average interest rate of outstanding borrowings in 2018 was 3.0% (2017: 4.1%).

The remaining terms of the borrowings as at 31 December 2018 are as follows:

The movements in borrowings during the year were as follows:

For more details regarding the fair value movement, please refer to note 29. Management of financial risks and financial instruments.