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Note 26 Debt
Accounting principles
Debt
Debt is recognised initially at fair value, net of transaction costs incurred. In subsequent periods, it is stated at amortised cost using the effective interest method; any difference between proceeds, net of transaction costs, and redemption value is recognised in the Consolidated Income Statement over the period of the borrowings. Interest expenses are accrued for and recorded in the Consolidated Income Statement for each period.

Debt with an original maturity greater than 12 months is classified as non-current debt in the Consolidated Statement of Financial Position, though repayments falling due within 12 months are presented in current liabilities under the current portion of non-current debt. Short-term commercial paper, bank and other interest-bearing borrowings for which the original maturity is less than 12 months are presented in current liabilities under interest-bearing liabilities.
Finance leases
Leases of property, plant and equipment under which the group has substantially all the rewards and risks of ownership are classified as finance leases. Finance leases are capitalised at the commencement of the lease at the lower of the fair value of the leased property or the estimated present value of the minimum lease payments. Each lease payment is allocated between the capital liability and finance charges so as to achieve a constant interest rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in interest-bearing liabilities with the interest element of the finance charge being taken to the Consolidated Income Statement over the lease period. Property, plant and equipment acquired under finance leasing contracts are depreciated over the lesser of the useful life of the asset or lease period.
The below table includes a breakdown of the group’s interest-bearing liabilities and the related changes in the balances.
Interest-bearing liabilities
As at 31 December
EUR million 2016 2015
Bond loans 1 705 1 834
Loans from credit institutions 1 434 1 637
Finance lease liabilities 56 61
Other non-current liabilities 12 38
Non-current Debt including Current Portion 3 207 3 570
Short-term borrowings 452 492
Interest payable 54 64
Derivative financial liabilities (see Note 25 ) 57 70
Bank overdrafts 4 1
Total Interest-bearing Liabilities 3 774 4 197
EUR million 2016 2015
Carrying Value at 1 January 4 197 4 894
Proceeds of new long-term debt 368 435
Repayment of long-term debt -781 -1 181
Change in short-term borrowings and interest payable -50 -15
Change in derivative financial liabilities -13 -110
Translation differences and other 53 174
Total Interest-bearing Liabilities 3 774 4 197
Borrowings have various maturities, details of which are set out in Note 24 Financial risk management, the longest being in 2036, and have either fixed or floating interest rates ranging from 0.6% (0.3%) to 8.6% (8.6%). The majority of group loans are denominated in euros, US dollars and Swedish crown. At 31 December 2016 unused committed credit facilities were unchanged at EUR 700 million. The EUR 700 million committed credit facility agreement with a syndicate of 13 banks matures in January 2019. The facility is used as a backup for general corporate purposes. In addition, Stora Enso has access to various long-term sources of funding up to EUR 1 000 (EUR 850) million mainly from Finnish pension funds.

During 2016, Stora Enso has successfully issued a new bond under its EMTN (Euro Medium Term Note) programme. The EUR 300 million seven-year bond pays a fixed coupon of 2.125% and matures in June 2023.

In June 2016, Stora Enso repurchased in a public tender part of its outstanding EUR 500 million fixed rate notes with a nominal value of EUR 285 million from the 2018 bond, and of EUR 67 million from the 2019 bond, issued in 2012. Including the previously mentioned repayments, Stora Enso’s total repayments of EUR, SEK and USD bond notes amounted to a nominal of EUR 427 (EUR 964) million during 2016.

In 2016, net interest-bearing liabilities decreased by EUR 514 million to EUR 2 726 million. Net interest-bearing liabilities are equal to total interest-bearing liabilities less total interest-bearing assets. Cash and cash equivalents net of overdrafts increased by EUR 142 million to EUR 949 million at 31 December 2016.
Bond loans in non-current debt
Issue/ Maturity Dates Description of Bond Interest Rate % Currency of Bond Nominal Value Issued Outstanding As at 31 December Carrying Value As at 31 December
2016 2015 2016 2015
All Liabilities are Held by the Parent Company Currency million EUR million
Fixed Rate
1993-2019 Series C Senior Notes 2019 8.600 USD 50 50 50 47 47
2006-2036 Global 7.250% Notes 2036 7.250 USD 300 300 300 281 272
2012-2017 Euro Medium Term Note 5.750 SEK 500 480 500 50 54
2012-2018 Euro Medium Term Note 5.000 EUR 500 212 500 212 498
2012-2019 Euro Medium Term Note 5.500 EUR 500 428 500 427 498
2016-2023 Euro Medium Term Note 2.125 EUR 300 300 - 298 -
Total Fixed Rate Bond Loans 1 315 1 369
Floating Rate
2006-2018 Euro Medium Term Note Euribor+0.96 EUR 25 25 25 25 25
2006-2018 Euro Medium Term Note Euribor+0.72 EUR 50 - 50 - 50
2012-2017 Euro Medium Term Note Stibor+3.90 SEK 2 200 2 060 2 200 215 240
2015-2025 Euro Medium Term Note Euribor+2.25 EUR 125 125 125 125 125
2015-2027 Euro Medium Term Note Euribor+2.35 EUR 25 25 25 25 25
Total Floating Rate Bond Loans 390 465
Total Bond Loans 1 705 1 834
Finance lease liabilities
At 31 December 2016 Stora Enso had a small number of finance leasing agreements for machinery and equipment for which capital costs of EUR 21 (EUR 27) million were included in property, plant and equipment; the depreciation and impairment thereon was EUR 8 (EUR 9) million. The aggregate leasing payments for the year amounted to EUR 8 (EUR 10) million, the interest element being EUR 1 (EUR 2) million. There was one new finance lease transaction during 2016 amounting EUR 2 million.
Finance lease liabilities
As at 31 December
EUR million 2016 2015
Minimum Lease Payments
Less than 1 year 29 9
1-2 years 28 28
2-3 years - 27
3-4 years - -
4-5 years - -
Over 5 years 1 -
58 64
Future finance charges -2 -3
Present Value of Finance Lease Liabilities 56 61
Present Value of Finance Lease Liabilities
Less than 1 year 28 7
1-2 years 27 27
2-3 years - 27
3-4 years - -
4-5 years - -
Over 5 years 1 -
56 61

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