2019 Annual financial report

Bonds and medium-term loan to finance the Epsilon acquisition

To finance the Epsilon acquisition, on June 5, 2019 the Group issued a euro 2.25 billion bond in three tranches:

• a first tranche of euro 750 million maturing in June 2025, with an annual coupon of 0.625%; 
• a second tranche of euro 750 million maturing in June 2028, with an annual coupon of 1.25%; 
• a third tranche of euro 750 million maturing in June 2031, with an annual coupon of 1.75%. 

Each of the three euro 750 million tranches were swapped into US dollars at a fixed rate.

The swaps were classified as cash flow hedges insofar as the swaps were created for the same amounts and maturities as the bonds and safeguard against exposure to fluctuations in future US  dollar cash flows. The fair value of these swaps is recognized in the balance sheet under “Other current receivables and current assets” and/or “Other creditors and current liabilities”. The change in the fair value of these instruments is booked in “Other comprehensive income” and transferred to the income statement as interests on debt are recognized and the asset value changed in US dollars. At December 31, 2019, the fair value of these derivative instruments was recorded on the consolidated balance sheet at EUR 87 million.

The Epsilon financing also came from a medium-term loan arranged on June 28, 2019, with the draw-down effective from July 1, 2019. This loan was arranged in three tranches (a USD 900 million tranche with a 3-year maturity; a euro 150 million tranche with a 4-year maturity; and a euro 150  million). The effective aggregate interest rate for this loan is 2.79%.

Medium-term syndicated loan

In 2017, Publicis Groupe introduced an interest rate swap to hedge itself against interest rate fluctuations in the US dollar component (USD 367 million at December 31, 2019) of the variable-rate medium-term syndicated loan.

Other bonds

The other Publicis Groupe SA bonds are issued at a fixed rate and denominated in euros.

The tranche of euro 700  million maturing in December 2021 (Eurobond 2021) and the tranche of euro 600 million maturing in December 2024 (Eurobond 2024) were swapped into US dollars, at a fixed rate, for the purposes of financing the acquisition of Sapient Corporation.

The swaps were qualified as cash flow hedges for intercompany US dollar financing. The fair value of these swaps was booked in the balance sheet under “Other creditors and current liabilities” in the amount of euro 112 million as at December 31, 2019 (euro 46 million as at December 31, 2018). The change in the fair value of these instruments is booked in “Other comprehensive income” and transferred to the income statement as interests on debt are paid and the asset value changed in US dollars.

These financial instruments were recognized at fair value according to the level 2 measurement method that corresponds to observable data other than quoted prices for identical assets or liabilities in active markets. This observable data corresponds primarily to exchange rates and interest rates.

Analysis by date of maturity