The ups and downs on financial and Glossary markets highlighted RWE’s traditional strengths: a strong balance sheet, high and stable cash flows from operating activities and financial discipline. These strengths enable us to stay on course for growth despite the financial market crisis. And they are the foundation of our good standing on the debt market. As in the past, the leading Glossary agencies have given us a high credit rating despite our plan to acquire the Dutch-based utility Essent.
At RWE, Group financing is handled by the corporate headquarters, RWE AG. Only in specific cases do our subsidiaries raise capital directly, especially if it is economically advantageous to make use of local credit and capital markets. Furthermore, RWE AG acts as co-ordinator when Group companies assume a liability: The company co-ordinates and decides on the scope of warranties issued and letters of comfort signed. Pooling these activities is a basic prerequisite for managing and monitoring financial risks centrally. Moreover, this strengthens our position when negotiating with banks, business partners, suppliers and customers.
We primarily meet our financing needs with high and stable cash flows that we generate from our operating activities. In addition, we have access to a number of financing instruments which we can use flexibly. One of our major tools is the Glossary (DIP) for long-term refinancing on the capital market. At the end of 2008, the nominal volume of bonds outstanding that we had issued through the DIP amounted to €10.2 billion. When we made our takeover bid for Essent in January 2009, the Executive and Supervisory Boards decided to increase the DIP’s scope from €20 billion to €30 billion. We will be able to cover the financing need arising upon the acquisition of the Dutch-based energy utility with a bridge loan guaranteed by banks. The line of credit was set at €9 billion. A €3.6 billion credit line will serve as an additional liquidity reserve. €1.6 billion of it will be available to us until October 2009, and €2.0 billion will be available until 2011. We have not used this line of credit so far. Furthermore, we have had a Glossary programme totalling US$5 billion for short-term financing on the money market since 2002. As of December 31, 2008, US$1.2 billion in RWE commercial paper was outstanding.
Neither the aforementioned financing programmes, nor the credit facility, contain specific financial covenants such as interest coverage, leverage or capitalization ratios that could trigger actions, such as acceleration of repayment or provision of additional collateral. Likewise, they do not contain rating triggers.