A euro 2.25 billion bond was issued on June 5, 2019 to finance the acquisition of Epsilon. It was issued in three tranches of euro 750 million each, at a fixed rate and in euros, each swapped into US dollars at a fixed rate.
The swaps were qualified as cash flow hedges of the bond issue in euros. 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, 2020, the fair value of these derivatives was booked in other current receivables and current assets for euro 65 million (compared to euro 87 million in other creditors and current liabilities at December 31, 2019).
A medium-term loan was also signed on July 1, 2019, in three tranches (a USD 900 million tranche with a three-year maturity, a euro 150 million tranche with a four-year maturity, and a euro 150 million tranche with a five-year maturity). The overall effective interest rate for this loan was 1.54% at December 31, 2020. The tranches of dollar 900 million and euro 150 million maturing in five years were repaid early in December 2020.
This loan was repaid in full in January 2020 and the interest rate swap to hedge it against interest rate fluctuations in the US dollar component of the variable-rate syndicated loan was also unwound.
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 taken out in order to finance the acquisition of Sapient Corporation.
At the same time, the parent company provided financing for the holding companies in the United States and swaps were put in place to hedge the Groupe’s exposure to changes in the euro/dollar exchange rate and changes in interest rates. These swaps were qualified as cash flow hedges for intercompany US dollar financing. 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.
At December 31, 2020, these swaps were terminated before their maturity and the hedged underlying was repaid. Consequently:
These swaps 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.
