RWE Bonds and financial debt

RWE successfully returned to the bond market.

RWE issued new bonds for the first time since 2004. A total of €2 billion was placed via RWE Finance B.V. in November 2008. Another €3 billion followed in February 2009, partially in order to finance the planned acquisition of Essent. All of the issuances were several times oversubscribed. The nominal volume of bonds issued by RWE amounted to €10.2 billion at the end of 2008 and was therefore slightly lower than in 2007 (€10.7 billion). American Water is not included in these figures. The weighted average remaining term to maturity of RWE’s bonds outstanding was nine years at the end of 2008. €0.2 billion in bonds come due in 2009.

Repayment of Essent bridge loan using bonds.

We backed the €9.3 billion takeover offer for Dutch utility Essent in January 2009 with €9 billion in interim financing guaranteed by ten major banks, and with our own cash reserves. The loans will come due one year after the offer is made. We have the right to extend the term for half of the total sum by an additional year. Since we have always pursued a forward-looking and long-term financing strategy, we have already started redeeming part of the interim financing by issuing bonds. Our goal is to fully replace the credit facility with long-term capital market debt.

Share of euro-based financial debt increased to 59 %.

By the end of 2008, our interest-bearing financial debt totalled €12.5 billion. This does not include American Water. Including currency hedges, at the end of the year under review, 59 % of our financial debt was in euros, 35 % in Sterling and 6 % in US dollars. Our share of debt denominated in euros was much higher than in 2007 (excluding American Water). In contrast, the share denominated in Sterling dropped by a similar order. This shift is largely due to foreign exchange effects. Furthermore, new issuances and redemptions resulted in a net rise in eurobonds.