10. Groupe's liquidity and financial rating
Description of the risk
In May 2023, the Groupe’s credit ratings were upgraded by Moody's from Baa2 to Baa1 for the first time since it was rated in 2005 and by Standard & Poor's, which returned to BBB+ after a period at BBB due to Covid. A financial rating downgrade could adversely affect the Groupe’s ability to raise funds and result in higher interest rates for future borrowings.
The Groupe is exposed to a liquidity risk when its incoming payments, which represent several times its revenue, no longer cover its outgoing payments, and at the same time its ability to raise new financial resources has been exhausted or is insufficient. In addition, a deterioration in customer payment terms could affect the Groupe’s available cash.
The increase in interest rates may lead to an increase in the cost of borrowing, which could have a negative impact on its profitability and its ability to make future investments.
Risk management
In a context of rising interest rates that could weaken certain banks, the Groupe mainly uses leading international banks (core banks).
As of December 31, 2023, the Groupe had liquid assets, calculated as the sum of cash and undrawn confirmed credit lines, at the highest level in its industry.
The Group's cash management has continued to benefit from the introduction of local centralized cash‑pooling centers in the Groupe’s main markets (domestic cash pooling). Two financial companies established in Dublin since 2014 continue to strengthen the Groupe's structure to manage financing transactions and the short‑term investing of subsidiaries’ liquidity. Since 2017, one of these two companies, MMS Multi Euro Services DAC, has been the lynchpin of the centralization of international cash pooling for the entire Groupe. The other company, MMS Ireland DAC, whose functional currency is the dollar, became the lynchpin of the centralization of cash pooling for most of the Groupe’s US entities.