22 Borrowings

In CHF millionNotes  31.12.200831.12.2007
Money market instruments  2737
Hybrid debt28  2 6772 936
Convertible debt  4063
Other debentures  494
Bank loans  37786
Finance lease obligations  25
Total borrowings33  3 1233 621


Hybrid debt

On 12 April 2007, ELM B.V., a Dutch repackaging vehicle, issued EUR 700 million in fixed/floating rate subordinated perpetual notes at a price of par to finance loan notes granted to Swiss Life/Rentenanstalt, which are guaranteed by Swiss Life Holding. Swiss Life/Rentenanstalt may repay the loan notes in full on 12 April 2017 or on any interest payment date thereafter, upon notice and subject to the consent of the Swiss Financial Market Supervisory Authority. The notes bear interest from 12 April 2007 to 12 April 2017 at a rate of 5.849% p.a. If the notes are not redeemed on 17 April 2017, the interest will be the aggregate of 2.5% and Euribor 3-month deposits.

On 16 November 2005, J.P. Morgan Bank Luxembourg S.A. issued on a fiduciary basis EUR 350 million fixed/floating rate subordinated perpetual notes at a price of 99.423% to fund a loan made by it to Swiss Life/Rentenanstalt. Swiss Life/Rentenanstalt may repay the loan in full on 16 November 2015 or on any interest payment date thereafter, upon notice and subject to the consent of the Swiss Financial Market Supervisory Authority. The notes bear interest from 16 November 2005 to 16 November 2015 at a rate of 5% p.a. If the notes are not redeemed on 16 November 2015, the interest rate will be the aggregate of 2.43% and Euribor for 3-month deposits.

On 1 July 2005, Swiss Life/Rentenanstalt entered into a forward agreement providing for the refinancing as of 2009 of a portion of the hybrid debt facility issued in 1999 in the amount of CHF 150 million on a 20-year/10-year non call subordinated step-up loan basis. The forward agreement will expire should the subordinated perpetual step-up loan issued in 1999 not be redeemed in 2009.

In 2001, Swiss Life/Rentenanstalt issued a subordinated step-up loan of EUR 100 million with a time to maturity of 20 years that can be repaid after 10 years. The interest rate equals Euribor plus a margin of 1.75% for the first ten years and 2.75% thereafter.

In March 1999, Swiss Life/Rentenanstalt privately placed a subordinated perpetual step-up loan comprising three simultaneous advances of EUR 443 million (at a rate of interest of Euribor plus a margin of 1.05%, increasing by 100 basis points as from April 2009), CHF 290 million (at a rate of interest of Libor plus a margin of 1.05%, increasing by 100 basis points as from April 2009) and EUR 215 million (at a rate of interest of 5.3655%, as from October 2009 the rate of interest will be an aggregate of Euribor plus a margin of 2.05%). Swiss Life/Rentenanstalt can call the EUR 443 million floating rate loan and the CHF 290 million floating rate loan at the earliest on 6 April 2009 and the EUR 215 million fixed-rate loan at the earliest on 6 October 2009 or at five-year intervals thereafter, upon notice and subject to the consent of the Swiss Financial Market Supervisory Authority.

Amounts in CHF million (if not noted otherwise)  31.12.0831.12.07

Issuer
  Nominal
value

Interest rate

Year of issue
Optional
redemption
Carrying
amount
Carrying
amount
Swiss Life/Rentenanstalt 1  EUR 7005.849%200720171 0391 152
Swiss Life/Rentenanstalt 2  EUR 3505.000%20052015517573
  Euribor
Swiss Life/Rentenanstalt  EUR 100+1.7500%20012011149165
  Euribor
Swiss Life/Rentenanstalt  EUR 443+1.0500%19992009660733
  Libor
Swiss Life/Rentenanstalt  CHF 290+1.0500%19992009290290
Swiss Life/Rentenanstalt  EUR 155.3655%199920092223
Total  2 6772 936
1  Hybrid loan notes granted by ELM B.V.
2  Hybrid bank loan originally granted by J.P. Morgan Bank Luxembourg S.A.


Convertible debt

On 10 June 2004, Swiss Life Holding issued CHF 317 million in 0.625% convertible bonds due in 2010. The bonds may be converted into registered shares of Swiss Life Holding at any time at the option of the holder. Bondholders exercising their conversion right are entitled to receive the number of shares equal to the principal amount of CHF 1000 divided by the original conversion price of CHF 209.625 (subject to adjustments, with effect from 29 July 2008 conversion price of CHF 200.20).

Swiss Life Holding has the option to redeem all outstanding bonds at their principal amount (together with unpaid accrued interest) at any time on or after 25 June 2007, provided that the closing price of the Swiss Life Holding share was at least 130% of the conversion price for 20 consecutive trading days. The early redemption at the option of Swiss Life Holding is subject to a period of 30 days’ notice to the bondholders.

The proceeds received from the issue of the convertible bonds have been split between a liability component and an equity component. The fair value of the liability component at issue date amounted to CHF 260 million and was calculated using a market interest rate for an equivalent non-convertible bond. The residual amount of CHF 57 million represents the value of the option to convert the instrument into Swiss Life Holding shares (SLH shares) and is included in share premium. Transaction costs of CHF 6 million were deducted from the liability and costs of CHF 1 million were recognised in share premium.

In 2008, convertible bonds were converted into 124 115 SLH shares (2007: 1 184 170 SLH shares) with a corresponding increase in share capital totalling CHF 3 million (2007: CHF 49 million) and an increase in share premium totalling CHF 20 million (2007: CHF 173 million).

Other debentures

On 30 June 2008, EUR 300 million in 4.375% bonds matured and were repaid.

Amounts in CHF million  31.12.0831.12.07

Issuer/instrument
 
Currency

Interest rate

Year of issue

Maturity
Carrying
amount
Carrying
amount
Swiss Life Insurance Finance Ltd. – guaranteed bonds  EUR4.375%20042008494
Total  494


Bank loans

On 25 July 2008, Swiss Life Insurance Finance Ltd entered into a EUR 500 million loan agreement with a syndicate of banks. The syndicated loan has a three-year maturity and is split into a EUR 200 million fully drawn loan bearing an interest rate of Euribor plus a margin of 0.70% and a EUR 300 million undrawn credit facility against a commitment fee of 0.225%.

Amounts in CHF million  31.12.0831.12.07

Type
 
Currency

Interest rate

Maturity
Carrying
amount
Carrying
amount
Mortgage loan  CHF2.77%20094546
Mortgage loan  CHF1.57%20103940
  Euribor
Syndicated loan  EUR+0.70%2011293
Total  37786


Finance lease obligations
In CHF million  31.12.200831.12.200731.12.200831.12.2007
 
Minimum lease
payments

Minimum lease
payments
Present value of
minimum lease
payments
Present value of
minimum lease
payments
Not later than 1 year  2323
Later than 1 year and not later than 5 years  22
Later than 5 years 
Total  2525
Future finance charges  00


 
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