Analysis of Debt
Total Debt (Carrying Amount)
LyondellBasell Industries N.V., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
Total debt exhibits a general upward trajectory over the five-year period from 2014 to 2018, increasing from 7,107 million USD to 9,387 million USD. Although a moderate contraction occurred in 2017, the overall trend indicates an expansion of the total carrying amount of debt obligations over the analysis window.
- Long-Term Debt Composition
- Long-term debt, excluding current maturities, serves as the primary driver of the total debt profile. This figure rose consistently from 6,757 million USD in 2014 to a peak of 8,549 million USD in 2017, before slightly decreasing to 8,497 million USD in 2018. This represents a sustained accumulation of long-term obligations throughout the majority of the period.
- Short-Term Debt Volatility
- Short-term debt demonstrates significant fluctuation compared to long-term obligations. After remaining relatively stable in 2014 and 2015, it increased to 594 million USD in 2016, experienced a sharp decline to 68 million USD in 2017, and subsequently surged to a period high of 885 million USD in 2018. This volatility suggests intermittent shifts in short-term financing strategies or operational liquidity requirements.
- Current Maturity Obligations
- Current maturities of long-term debt remained negligible and stable throughout the entire period, fluctuating minimally between 2 million USD and 5 million USD. This indicates that a very small proportion of the long-term debt is scheduled for repayment in the immediate term, suggesting a debt structure that avoids significant short-term refinancing pressure from long-term instruments.
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Total Debt (Fair Value)
| Dec 31, 2018 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Commercial paper | 809) |
| Financial payables to equity investees | —) |
| Precious metal financings | 77) |
| Other short-term debt | 6) |
| Long-term debt excluding capital leases | 8,476) |
| Other long-term debt | 10) |
| Total debt including capital leases (fair value) | 9,378) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 1.00 |
Based on: 10-K (reporting date: 2018-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt: 4.55%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 5.00% | 988) | 49) | |
| 6.00% | 975) | 59) | |
| 5.75% | 993) | 57) | |
| 4.63% | 973) | 45) | |
| 1.88% | 855) | 16) | |
| 4.00% | 742) | 30) | |
| 3.50% | 964) | 34) | |
| 8.10% | 300) | 24) | |
| 5.25% | 722) | 38) | |
| 4.88% | 980) | 48) | |
| 3.10% | 885) | 27) | |
| Total | 9,377) | 427) | |
| 4.55% | |||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × 427 ÷ 9,377 = 4.55%
Interest Costs Incurred
LyondellBasell Industries N.V., interest costs incurred
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
Total interest costs incurred exhibited a volatile trend between 2014 and 2018, characterized by a significant peak in 2017 followed by a moderate contraction in 2018.
- Interest Expense Trends
- Interest expense remained relatively stable from 2014 through 2016, fluctuating between 310 million and 352 million. A sharp increase occurred in 2017, with expenses rising to 491 million, representing the highest value in the period. By 2018, this figure declined to 360 million, returning to a level comparable to the 2014 baseline.
- Capitalized Interest Patterns
- Capitalized interest demonstrated inconsistent movement, reaching a low of 11 million in 2015 and a peak of 45 million in 2018. The substantial increase in 2018 indicates a higher proportion of interest costs being allocated to long-term assets rather than being expensed immediately.
- Aggregate Interest Costs Incurred
- The total interest costs incurred mirrored the trajectory of the interest expense, peaking at 511 million in 2017. Although total costs decreased to 405 million in 2018, this figure remained higher than the levels observed between 2014 and 2016, driven largely by the increase in capitalized interest during the final year.
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Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
2018 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= 5,671 ÷ 360 = 15.75
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= 5,671 ÷ 405 = 14.00
An analysis of interest coverage metrics from 2014 to 2018 reveals a fluctuating but generally robust capacity to service interest obligations. Both tracked ratios reached a peak in 2015, followed by a decline that culminated in a five-year low in 2017, before experiencing a recovery in 2018.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- This metric began at 16.08 in 2014 and rose to a peak of 20.31 in 2015. A subsequent downward trend was observed over the following two years, with the ratio decreasing to 15.65 in 2016 and reaching its lowest point of 11.71 in 2017. By the end of 2018, the ratio improved to 14.00, indicating a stabilization in the ability to cover total interest expenses, including those capitalized.
- Interest Coverage Ratio (without capitalized interest)
- The non-adjusted ratio followed a trajectory nearly identical to the adjusted metric, starting at 17.23 in 2014 and climbing to 21.03 in 2015. The ratio then contracted to 17.25 in 2016 and further to 12.19 in 2017, before rebounding to 15.75 by the end of 2018.
- Comparative Analysis of Capitalized Interest Impact
- A consistent variance exists between the two ratios, with the adjusted ratio remaining lower than the non-adjusted ratio in every reporting period. This gap demonstrates that capitalized interest creates a persistent downward pressure on the coverage ratio, though both metrics maintain levels well above the critical threshold of 1.0, suggesting a low risk of default during the analyzed period.
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