Borregaard's financial policy shall ensure short-term and long-term financial flexibility for the Group.
Borregaard shall aim at maintaining an "investment grade" credit quality in order to ensure access to debt capital on favourable terms and conditions. In order to be considered "investment grade", Borregaard's leverage ratio1 is targeted between 1.00 and 2.25 over time.
For long-term funding, average maturity for debt shall be at least 2.5 years with a maturity profile spread over several years. Refinancing risk shall be actively managed and the refinancing process for maturing loans shall preferably commence at least one year ahead of scheduled maturity.
Borregaard shall seek to diversify its long-term funding sources, supplementing bank loans with debt capital markets and other sources, subject to availability and conditions. In accordance with established guidelines, Borregaard shall develop and maintain relationships with a core group of banks, based on long-term financing commitments.
Borregaard shall primarily follow a floating interest rate strategy but may consider fixed rates for a maximum of 50% of its debt, using appropriate derivatives.
Group liquidity shall be managed in cash pools, with Borregaard AS as owner of top accounts and legal counterpart to relevant banks. Excess liquidity shall primarily be used for repayment of debt. Alternatively, excess liquidity can be placed with relationship banks or other well-rated banks.
For more details, see Annual Report for 2020 page 112 (Note 26 in the Consolidated Financial Statements).
1Non-GAAP measure, see Annual Report for 2020 page 142 for definition