MEXICAN ECONOMIC DEVELOPMENT INC (ifrs-full:DisclosureOfBorrowingsExplanatory)

Note 18. Bank Loans and Notes Payables


(in millions	At December 31,⁽¹⁾											2023 and		Carrying Value at December 31,			Fair Value at December 31,		Carrying Value at December 31,
of Mexican pesos)	2018			2019		2020		2021		2022		Thereafter		2017			2017		2016⁽¹⁾
Short-term debt:
Fixed rate debt:
Argentine pesos
Bank loans		106			—		—		—		—		—		106			107		644
Interest rate		22.4	%		—		—		—		—		—		22.4	%		—		32.0	%
Chilean pesos
Bank loans		770			—		—		—		—		—		770			770		338
Interest rate		3.1	%		—		—		—		—		—		3.1	%		—		4.3	%
U.S. dollars
Bank loans		—			—		—		—		—		—		—			—		206
Interest rate		—			—		—		—		—		—		—			—		3.4	%
Variable rate debt:
Colombian pesos
Bank loans		1,951			—		—		—		—		—		1,951			1,949		723
Interest rate		7.3	%		—		—		—		—		—		7.3	%		—		9.1	%
Chilean pesos
Bank loans		3			—		—		—		—		—		3			3		1
Interest rate		6.1	%		—		—		—		—		—		6.1	%		—		10.0	%

Total short-term debt	Ps.	2,830		Ps.	—	Ps.	—	Ps.	—	Ps.	—	Ps.	—	Ps.	2,830		Ps.	2,829	Ps.	1,912


(in millions	At December 31,⁽¹⁾															2023 and			Carrying Value at December 31,			Fair Value at December 31,		Carrying Value at December 31,
of Mexican pesos)	2018			2019			2020			2021			2022			Thereafter			2017			2017		2016⁽¹⁾
Long-term debt:
Fixed rate debt:
Euro
Senior unsecured notes		Ps. —			Ps. —			Ps. —			Ps. —			Ps. —			Ps. 23,449			Ps. 23,449			Ps. 24,697		Ps. 21,627
Interest rate		—			—			—			—			—			1.8	%		1.8	%				1.8	%
U.S. dollars
Yankee bond		8,774			—			9,844			—			—			29,425			48,043			51,938		61,703
Interest rate		2.4	%		—			4.6	%		—			—			4.4	%		4.1	%				3.8	%
Bank of NY (FEMSA USD 2023)		—			—			—			—			—			5,852			5,852			5,870		6,117
Interest rate ⁽¹⁾		—			—			—			—			—			2.9	%		2.9	%		—		2.9	%
Bank of NY (FEMSA USD 2043)		—			—			—			—			—			13,510			13,510			14,539		14,128
Interest rate ⁽¹⁾		—			—			—			—			—			4.4	%		4.4	%		—		4.4	%
Finance leases		6			5			2			—			—			—			13			13		20
Interest rate ⁽¹⁾		4.0	%		3.8	%		3.5	%		—			—			—			3.8	%		—		3.9	%
Mexican pesos
Units of investment (UDIs)		—			—			—			—			—			—			—			—		3,245
Interest rate		—			—			—			—			—			—			—			—		4.2	%
Domestic senior notes		—			—			—			2,498			—			15,981			18,479			17,035		9,991
Interest rate		—			—			—			8.3	%		—			6.7	%		6.9	%		—		6.2	%
BBrazilian reais
Bank loans		391			247			152			92			78			73			1,033			1,055		742
Interest rate		5.7	%		5.8	%		5.8	%		5.8	%		5.8	%		5.8	%		5.7	%		—		5.3	%
Notes payable⁽²⁾		—			6,707			—			—			—			—			6,707			6,430		7,022
Interest rate		—			0.4	%		—			—			—			—			0.4	%		—		0.4	%
Chilean pesos
Bank loans		40			—			—			—			—			—			40			40		164
Interest rate		7.9	%		—			—			—			—			—			7.9	%		—		7.0	%
Finance leases		27			28			26			17			—			—			98			98		114
Interest rate		3.8	%		3.7	%		3.4	%		3.2	%		—			—			3.5	%		—		3.4	%
Colombian pesos
Bank loans		728			—			—			—			—			—			728			741		758
Interest rate		9.6	%		—			—			—			—			—			9.6	%		—		9.6	%
Finance leases		6			6			5			—			—			—			17			17		—
Interest rate		4.0	%		4.0	%		4.0	%		—			—			—			4.2	%		—		—
Subtotal		Ps. 9,972			Ps. 6,993			Ps. 10,029			Ps. 2,607			Ps. 78			Ps. 88,290			Ps. 117,969			Ps. 122,473		Ps. 125,631

(1)	All interest rates shown in this table are weighted average contractual annual rates.


(in millions	At December 31,⁽¹⁾															2023 and			Carrying Value at December 31,			Fair Value at December 31,		Carrying Value at December 31,
of Mexican pesos)	2018			2019			2020			2021			2022			Thereafter			2017			2017		2016⁽¹⁾
Variable rate debt:
U.S. dollars
Bank loans	Ps.	—		Ps.	—		Ps.	—		Ps.	4,032		Ps.	—		Ps.	—		Ps.	4,032		Ps.	4,313	Ps.	4,218
Interest rate ⁽¹⁾		—			—			—			2.1	%		—			—			2.1	%		—		1.6	%
Mexican pesos
Domestic senior notes		—			—			—			—			1,496			—			1,496			1,500		—
Interest rate ⁽¹⁾		—			—			—			—			7.7	%		—			7.7	%		—		—
Argentine pesos
Bank loans		—			—			—			—			—			—			—			—		40
Interest rate		—			—			—			—			—			—			—					27.8	%
Brazilian reais
Bank loans		284			284			229			66			7			—			870			883		1,864
Interest rate		8.5	%		8.5	%		8.5	%		8.5	%		8.5	%		—			8.5	%		—		5.5	%
Notes payable		10			5			—			—			—			—			15			14		26
Interest rate		0.4	%		0.4	%		—			—			—			—			0.4	%		—		0.4	%
Colombian pesos
Bank loans		—			—			—			—			—			—			—			—		1,206
Interest rate		—			—			—			—			—			—			—			—		9.6	%
Chilean pesos
Bank loans		494			664			1,110			732			751			385			4,136			4,135		4,351
Interest rate		4.3	%		4.2	%		4.1	%		4.0	%		4.1	%		3.9	%		4.1	%		—		3.7	%

Subtotal	Ps.	788		Ps.	953		Ps.	1,339		Ps.	4,830		Ps.	2,254		Ps.	385		Ps.	10,549		Ps.	10,845	Ps.	11,705

Total long-term debt	Ps.	10,760		Ps.	7,946		Ps.	11,368		Ps.	7,437		Ps.	2,332		Ps.	88,675		Ps.	128,518		Ps.	133,318	Ps.	137,336

Current portion of long term debt																				(10,760	)				(5,369	)

																			Ps.	117,758				Ps.	131,967

(1)	All interest rates shown in this table are weighted average contractual annual rates.

(2)

Promissory note denominated and payable in Brazilian reais; however, it is linked to the performance of the exchange rate between the Brazilian real and the U.S. dollar. As a result, the principal amount under the promissory note may be increased or reduced based on the depreciation or appreciation of the Brazilian real relative to the U.S. dollar.


Hedging Derivative Financial Instruments ⁽¹⁾	2018			2019			2020			2021			2022			2023 and Thereafter			Total 2017			Total 2016
	(notional amounts in millions of Mexican pesos)
Cross currency swaps: Units of investments to Mexican pesos and variable rate:
Fixed to variable	Ps.	—		Ps.	—		Ps.	—		Ps.	—		Ps.	—		Ps.	—		Ps.	—		Ps.	2,500
Interest pay rate		—			—			—			—			—			—			—			5.9	%
Interest receive rate		—			—			—			—			—			—			—			4.2	%
U.S. dollars to Mexican pesos
Fixed to variable ⁽²⁾		—			—			—			—			—			11,403			11,403			11,403
Interest pay rate		—			—			—			—			—			8.9	%		8.9	%		7.4	%
Interest receive rate		—			—			—			—			—			4.0	%		4.0	%		4.0	%
Fixed to fixed					—			9,868			—			—			9,951			19,818			19,451
Interest pay rate		—			—			9.0	%		—			—			9.1	%		9.1	%		8.8	%
Interest receive rate		—			—			3.9	%		—			—			4.0	%		3.9	%		4.1	%
U.S. dollars to Brazilian reais
Fixed to variable		8,782			6,263			4,571			—			—			—			19,617			21,210
Interest pay rate		6.3	%		5.2	%		6.6	%		—			—			—			6.0	%		11.9	%
Interest receive rate		2.7	%		0.4	%		2.9	%		—			—			—			2.0	%		1.9	%
Variable to variable		15,571			—			—			4,046			—			—			19,617			22,834
Interest pay rate		6.7	%		—			—			6.1	%		—			—			6.6			12.4	%
Interest receive rate		2.6	%		—			—			1.9	%		—			—			2.5			2.0	%
Chilean pesos
Variable to fixed		—			—			620			—			—			—			620			827
Interest pay rate		—			—			6.9	%		—			—			—			6.9	%		6.9	%
Interest receive rate		—			—			3.9	%		—			—			—			3.9	%		6.2	%

Interest rate swap:
Mexican pesos
Variable to fixed rate:		—			65			—			650			875			1,925			3,515			3,591
Interest pay rate		—			6.5	%		—			7.6	%		6.6	%		5.8	%		5.8	%		6.4	%
Interest receive rate		—			3.7	%		—			3.8	%		4.5	%		4.5	%		4.5	%		5.1	%
Variable to fixed rate:
Interest pay rate		—			—			—			—			—			—			—			5.9	%
Interest receive rate		—			—			—			—			—			—			—			6.0	%
Variable to fixed rate ⁽²⁾:
Interest pay rate		—			—			—			—			—			—			7.2	%		7.2	%
Interest receive rate		—			—			—			—			—			—			8.9	%		7.4	%

(1)	All interest rates shown in this table are weighted average contractual annual rates.

(2)	Interest rate swaps with a notional amount of Ps. 11,403 that receive a variable rate of 8.9% and pay a fixed rate of 7.2%; joined with a cross currency swap, which covers U.S. dollars to Mexican pesos, that receives a fixed rate of 4.0% and pay a variable rate of 8.9%.

For the years ended December 31, 2017, 2016 and 2015, the interest expense is comprised as follows:


	2017			2016			2015
Interest on debts and borrowings		Ps. 6,409			Ps. 5,694			Ps. 4,586
Capitalized interest		(10	)		(32	)		(60	)
Finance charges for employee benefits		317			282			276
Derivative instruments		4,339			3,519			2,894
Finance operating charges		69			183			79
Finance charges payable under finance leases		—			—			2

		Ps. 11,124			Ps. 9,646			Ps. 7,777

In March 14, 2016, the Company issued long-term debt on the Irish Stock Exchange (ISE) in the amount of €. 1,000, which was made up of senior notes with a maturity of 7 years, a fixed interest rate of 1.75% and a spread of 155 basis points over the relevant benchmark mid-swap, for a total yield of 1.824%. The Company has designated this non-derivative financial liability as a hedge on the net investment in Heineken. For the year ended December 31, 2017, a foreign exchange loss, net of tax, has been recognized as part of the exchange differences on translation of foreign operations within the cumulative other comprehensive income of Ps. 1,259.

In August 18, 2017, Coca-Cola FEMSA partially prepaid U.S. $555 of a dollar denominated bond due in 2018, reducing the outstanding senior note to U.S. $445 with interest at a fixed rate of 2.38%.

Coca-Cola FEMSA has the following bonds: a) registered with the Mexican stock exchange: i) Ps. 2,500 (nominal amount) with a maturity date in 2021 and fixed interest rate of 8.27%, ii) Ps. 7,500 (nominal amount) with a maturity date in 2023 and fixed interest rate of 5.46%, iii) Ps. 1,500 (nominal amount) with a maturity date 2022 and floating interest rate of TIIE + 0.25% and iv) Ps. 8,500 (nominal amount) with a maturity date 2027 and fixed interest rate of 7.87%; and b) registered with the SEC: i) Senior notes of U.S. $500 with interest at a fixed rate of 4.63% and maturity date on February 15, 2020, ii) Senior notes of U.S. $445 with interest at a fixed rate of 2.38% and maturity date on November 26, 2018, iii) Senior notes of U.S. $900 with interest at a fixed rate of 3.88% and maturity date on November 26, 2023 and iv) Senior notes of U.S. $600 with interest at a fixed rate of 5.25% and maturity date on November 26, 2043 all of which are guaranteed by Coca-Cola FEMSA subsidiaries: Propimex, S. de R.L. de C.V., Comercializadora La Pureza de Bebidas, S. de R.L. de C.V., Controladora Interamericana de Bebidas, S. de R.L. de C.V., Grupo Embotellador Cimsa, S. de R.L. de C.V., Refrescos Victoria del Centro, S. de R.L. de C.V., Distribuidora y Manufacturera del Valle de Mexico, S. de R.L. de C.V (as successor guarantor of Servicios Integrados Inmuebles del Golfo, S. de R.L. de C.V.) and Yoli de Acapulco, S. de R.L. de C.V. (“Guarantors”).

The Company has financing from different institutions under agreements that stipulate different restrictions and covenants, which mainly consist of maximum levels of leverage and capitalization as well as minimum consolidated net worth and debt and interest coverage ratios. As of the date of these consolidated financial statements, the Company was in compliance with all restrictions and covenants contained in its financing agreements.

18.1 Reconciliation of liabilities arising from financing activities

Carrying
Value at
December
31, 2016

Cash Flows

Non-cash flows

Carrying
Value at
December 31,
2017

Acquisition

Foreign
Exchange
Movement

Others

Bank loans

Ps.

14,497

Ps.

(949

)

Ps.

—

Ps.

190

Ps.

(69

)

Ps.

13,669

Notes payable

123,859

(3,574

)

—

4,954

(7,688

)

117,551

Lease liabilities

892

)

—

(756

)

128

Total liabilities from financing activities

Ps.

139,248

Ps.

(4,531

)

Ps.

—

Ps.

5,144

Ps.

(8,513

)

Ps.

131,348


	Carrying Value at December 31, 2015		Cash Flows			Non-cash flows								Carrying Value at December 31, 2016
	Carrying Value at December 31, 2015		Cash Flows			Acquisition		Foreign Exchange Movement			Others			Carrying Value at December 31, 2016
Bank loans	Ps.	7,357	Ps.	(2,597	)	Ps.	377	Ps.	(50	)	Ps.	9,410		Ps.	14,497
Notes payable		83,945		24,234			—		15,790			(110	)		123,859
Lease liabilities		562		(466	)		9		—			786			892

Total liabilities from financing activities	Ps.	91,864	Ps.	21,171		Ps.	386	Ps.	15,740		Ps.	10,086		Ps.	139,248

MEXICAN ECONOMIC DEVELOPMENT INC | CIK:0001061736 |

ifrs-full:DisclosureOfBorrowingsExplanatory