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Bank Loans and Notes Payable

12 Months Ended

Dec. 31, 2019

Note 19. Bank Loans and Notes Payable


	At December 31, (1)
(in millions of Mexican pesos)	2020			2021			2022			2023			2024			2025 and Thereafter			Carrying Value at December 31, 2019			Fair Value at December 31, 2019		Carrying Value at December 31, 2018 (1)
Short-term debt:
Fixed rate debt:
Colombian pesos
Bank loans	Ps.	769		Ps.	—		Ps.	—		Ps.	—		Ps.	—		Ps.	—		Ps.	769		Ps.	769	Ps.	—
Interest rate		5.1	%		—			—			—			—			—			5.1	%		—		—
Argentine pesos
Bank loans		126			—			—			—			—			—			126			126		157
Interest rate		63.5	%		—			—			—			—			—			63.5	%		—		36.8	%
Chilean pesos
Bank loans		977			—			—			—			—			—			977			977		594
Interest rate		2.6	%		—			—			—			—			—			2.6	%		—		3.2	%
U.S. dollars
Bank loans		1,038			—			—			—			—			—			1,038			1,038		—
Interest rate		2.6	%		—			—			—			—			—			2.6	%		—		—
Capital leases		—			—			—			—			—			—			—			—		10
Interest rate		—			—			—			—			—			—			—			—		3.3	%
Uruguayan pesos
Bank loans		63			—			—			—			—			—			63			63		771
Interest rate		11.6	%		—			—			—			—			—			11.6	%		—		10	%
Variable rate debt:
Mexican pesos														x
Bank loans		100			—			—			—			—			—			100			100		450
Interest rate		7.9	%		—			—			—			—			—			7.9	%		—		9.2	%
Colombian pesos
Bank loans		431			—			—			—			—			—			431			431		454
Interest rate		4.7	%		—			—			—			—			—			4.7	%		—		5.6	%
Argentine pesos
Bank loans		32			—			—			—			—			—			32			32		—
Interest rate		54.3	%		—			—			—			—			—			54.3	%		—		—
Brazilian reals
Bank loans		399			—			—			—			—			—			399			399		—
Interest rate		9.4	%		—			—			—			—			—			9.4	%		—		—

Total short-term debt	Ps.	3,935		Ps.	—		Ps.	—		Ps.	—		Ps.	—		Ps.	—		Ps.	3,935		Ps.	3,935	Ps.	2,436


(in millions of Mexican pesos)	2020			2021			2022			2023			2024			2025 and Thereafter			Carrying Value at December 31, 2019			Fair Value at December 31, 2019		Carrying Value at December 31, 2018 (1)
Long-term debt:
Fixed rate debt:
Euro
Senior unsecured notes	Ps.	—		Ps.	—		Ps.	—		Ps.	21,046		Ps.	—		Ps.	—		Ps.	21,046		Ps.	22,181	Ps.	22,439
Interest rate		—			—			—			1.7	%		—			—			1.7	%		—		1.7	%
U.S. dollars
Yankee bond		9,421			—			—			16,840			—			11,314			37,575			41,231		39,204
Interest rate		4.6	%		—			—			3.9	%		—			5.3	%		4.5	%		—		4.5	%
U.S. dollars Promissory Note		—			—			—			—			—			—			—			—		4,652
Interest rate (1)		—			—			—			—			—			—			—			—		0.4	%
Bank of NY (FEMSA USD 2023)		—			—			—			5,593			—			—			5,593			5,715		5,849
Interest rate (1)		—			—			—			2.9	%		—			—			2.9	%		—		2.9	%
Bank of NY (FEMSA USD 2043)		—			—			—			—			—			12,943			12,943			14,611		13,504
Interest rate (1)		—			—			—			—			—			4.4	%		4.4	%		—		4.4	%
Bank loans		439			437			437			436			436			—			2,185			2,185		—
Interest rate		3.6	%		3.6	%		3.6	%		3.6	%		3.6	%		—			3.6	%		—		—
Mexican pesos
Domestic senior notes		—			2,499			—			7,496			—			8,489			18,484			18,066		18,481
Interest rate		—			8.3	%		—			5.5	%		—			7.9	%		6.9	%		—		6.9	%
Bank loans		49			31			20			12			3			—			115			116		77
Interest rate		8.2	%		9.3	%		11.0	%		11.0	%		11.0	%		—			9.3	%		—		6.4	%
Brazilian reais
Bank loans		118			197			61			35			23			—			434			434		545
Interest rate		5.9	%		8.8	%		6.1	%		6.4	%		6.6	%		—			7.3	%		—		6.0	%
Chilean pesos
Capital leases		26			14			—			—			—			—			40			39		—
Interest rate		3.5	%		3.2	%		—			—			—			—			3.4	%		—		—
Uruguayan pesos
Bank loans		477			788			—			—			—			—			1,265			1,265		573
Interest rate		10.2	%		9.9	%		—			—			—			—			5.8	%		—		10.2	%

Subtotal	Ps.	10,530		Ps.	3,966		Ps.	518		Ps.	51,458		Ps.	462		Ps.	32,746		Ps.	99,680		Ps.	105,842	Ps.	105,405

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

(in millions of Mexican pesos)	2020			2021			2022			2023			2024			2025 and Thereafter			Carrying Value at December 31, 2019			Fair Value at December 31, 2019		Carrying Value at December 31, 2018 (1)
Variable rate debt:
U.S. dollars
Bank loans	Ps.	—		Ps.	—		Ps.	—		Ps.	—		Ps.	—		Ps.	—		Ps.	—		Ps.	—	Ps.	4,025
Interest rate (1)		—			—			—			—			—			—			—			—		3.3	%
Mexican pesos
Domestic senior notes		—			—			1,459			—			—			—			1,459			1,385		1,497
Interest rate (1)		—			—			8.0	%		—			—			—			8.0	%		—		8.6	%
Bank Loans		263			119			81			34			9			9,358			9,864			9,864		10,731
Interest rate (1)		8.5	%		9.0	%		8.9	%		9.0	%		9.5	%		8.2	%		8.4	%		—		8.6	%
Brazilian reais
Bank loans		184			52			6			—			—			—			242			242		505
Interest rate		7.8	%		7.8	%		7.8	%		—			—			—			7.8	%		—		9.5	%
Notes payable (2)		—			—			—			—			—			—			—			—		5
Interest rate		—			—			—			—			—			—			—			—		0.4	%
Colombian pesos
Bank loans		417			4			1			—			—			—			422			422		848
Interest rate		5.7	%		6.8	%		6.8	%		—			—			—			5.7	%		—		5.7	%
Chilean pesos
Bank loans		875			577			593			304			—			—			2,349			2,348		3,212
Interest rate		3.9	%		4.0	%		4.3	%		4.1	%		—			—			4.1	%		—		4.1	%

Subtotal	Ps.	1,739		Ps.	752		Ps.	2,140		Ps.	338		Ps.	9		Ps.	9,358		Ps.	14,336		Ps.	14,261	Ps.	20,823

Total long-term debt	Ps.	12,269		Ps.	4,718		Ps.	2,658		Ps.	51,796		Ps.	471		Ps.	42,104		Ps.	114,016		Ps.	120,103	Ps.	126,228

Current portion of long term debt																				(12,269	)				(11,238	)

																			Ps.	101,747				Ps.	114,990

(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)	2020			2021			2022			2023			2024			2025 and Thereafter			Total 2019			Total 2018
	(notional amounts in millions of Mexican pesos)
Cross currency swaps:
U.S. dollars to Mexican pesos
Fixed to variable (3)	Ps.	—		Ps.	—		Ps.	—		Ps.	11,403		Ps.	—			—		Ps.	11,403		Ps.	11,403
Interest pay rate		—			—			—			8.8	%		—			—			8.8	%		9.8	%
Interest receive rate		—			—			—			4.0	%		—			—			4.0	%		4.0	%
Fixed to fixed		9,423			—			—			2,963			—			6,596			18,982			19,768
Interest pay rate		9.0	%		—			—			7.6	%		—			9.7	%		9.0	%		9.1	%
Interest receive rate		3.9	%		—			—			3.9	%		—			4.0	%		3.9	%		3.9	%
Fixed to fixed (2)
Interest pay rate		—			—			—			—			—			9.4	%		9.4	%		—
Interest receive rate		—			—			—			—			—			4.4	%		4.4	%		—
U.S. dollars to Brazilian reais
Fixed to variable		—			—			—			—			—			—			—			4,652
Interest pay rate		—			—			—			—			—			—			—			4.7	%
Interest receive rate		—			—			—			—			—			—			—			0.4	%
Fixed to fixed		4,365			—			—			—			—			—			4,365			4,559
Interest pay rate		8.3	%		—			—			—			—			—			8.3	%		8.3	%
Interest receive rate		2.9	%		—			—			—			—			—			2.9	%		2.9	%
Variable to fixed		—			—			—			9,046			—			—			9,046			13,483
Interest pay rate		—			—			—			9.5	%		—			—			9.5	%		9.0	%
Interest receive rate		—			—			—			3.9	%		—			—			3.9	%		3.6	%
Chilean pesos
Variable to fixed		163			—			—			—			—			—			163			364
Interest pay rate		6.9	%		—			—			—			—			—			6.9	%		6.9	%
Interest receive rate		4.7	%		—			—			—			—			—			4.7	%		4.6	%

Interest rate swap:
Mexican pesos
Variable to fixed rate:		—			405			414			1,367			2,167			—			4,353			2,847
Interest pay rate		—			7.6	%		6.6	%		5.8	%		3.6	%		—			4.9	%		6.3	%
Interest receive rate		—			2.8	%		4.9	%		4.1	%		3.7	%		—			3.9	%		4.0	%
Variable to fixed rate (3) :
Interest pay rate		—			—			—			7.2	%		—			—			7.2	%		7.2	%
Interest receive rate		—			—			—			8.8	%		—			—			8.8	%		9.8	%

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

(2)	Cross Currency swaps which covers U.S. dollars to Mexican pesos with a notional of Ps.8,869, that have a starting date in 2023; receiving a fixed rate of 4.4% and pay a variable rate of 9.4%.

(3)	Interest rate swaps with a notional amount of Ps. 11,403 that receive a variable rate of 8.8% 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 8.8%.

For the years ended December 31, 2019, 2018 and 2017, the interest expense is comprised as follows:


	2019		2018			2017
Interest on debts and borrowings	Ps.	6,434	Ps.	6,760		Ps.	6,377
Capitalized interest		—		(5	)		(10	)
Finance charges for employee benefits		382		373			317
Derivative instruments		2,300		2,649			4,339
Finance operating charges		243		48			69
Finance charges payable for leases		4,774		—			—

	Ps.	14,133	Ps.	9,825		Ps.	11,092

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, 2019, a foreign exchange gain, 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.

991

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%.

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. $900 with interest at a fixed rate of 3.88% and maturity date on November 26, 2023; iii) Senior notes of U.S. $600 with interest at a fixed rate of 5.25% and maturity date on November 26, 2043.

The mentioned bonds 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”).

During 2018 Coca-Cola FEMSA had credit contracts in Mexican and Uruguayan peso with some banks for Ps. 10,100 and Ps. 1,344, respectively. On November 26, 2018, The Company paid the total balance of its bond in USD for USD 445 million and the total balance of Mexican debt for Ps. 10,100.

During 2019 Coca-Cola FEMSA celebrated bank loans in Mexico for an amount of Ps. 9,400 at an interest rate of 8.39% and 7.91%, such loans were used to settled bank loans denominated in USD and for general corporate purposes. Additionally, the Company obtained during 2019 bank loans in Uruguay, Colombia and Argentina for an amount of Ps. 1,670.

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.

19.1 Reconciliation of liabilities arising from financing activities


	Carrying Value at January 1, 2019		Cash Flows			Non-cash flows										Carrying Value at December 31, 2019
						Acquisition		New leases		Foreign Exchange Income (Loss)			Others
Bank loans	Ps.	22,944	Ps.	(2,999	)	Ps.	1,917	Ps.	—	Ps.	(397	)	Ps.	(658	)	Ps.	20,807
Notes payable		105,720		(5,022	)		—		—		(1,244	)		(2,310	)		97,144

Total liabilities from financing activities		128,664		(8,021	)		1,917		—		(1,641	)		(2,968	)		117,951

Financial leases		50,220		(8,848	)		2,187		7,490		(10	)		3,640			54,679


Total financing activities	Ps.	178,884	Ps.	(16,869	)	Ps.	4,104	Ps.	7,490	Ps.	(1,651	)	Ps.	672		Ps.	172,630


	Carrying Value at December 31, 2017		Cash Flows			Non-cash flows										Carrying Value at December 31, 2018
						Acquisition		New leases		Foreign Exchange Movement			Others
Bank loans	Ps.	13,669	Ps.	8,313		Ps.	1,147	Ps.	—	Ps.	417		Ps.	(602	)	Ps.	22,944
Notes payable		117,551		(9,314	)		—		—		(769	)		(1,840	)		105,628
Lease liabilities		128		(26	)		—		—		(10	)		—			92

Total liabilities from financing activities		131,348		(1,027	)		1,147		—		(362	)		(2,442	)		128,664

	Carrying Value at December 31, 2016		Cash Flows			Non-cash flows										Carrying Value at December 31, 2017
						Acquisition		New leases		Foreign Exchange Movement			Others
Bank loans	Ps.	14,497	Ps.	(949	)	Ps.	—	Ps.	—	Ps.	190		Ps.	(69	)	Ps.	13,669
Notes payable		123,859		(3,574	)		—		—		4,954			(7,688	)		117,551
Lease liabilities		892		(8	)		—		—		—			(756	)		128

Total liabilities from financing activities		139,248		(4,531	)		—		—		5,144			(8,513	)		131,348