Obbligazione Covestra AG 0.875% ( XS2188805688 ) in EUR

Covestra AG

100 EUR ▲

Germania

XS2188805688 ( in EUR )

0.875% per anno ( pagato 1 volta l'anno)

03/02/2026 - Obbligazione è scaduto

Prospetto opuscolo dell'obbligazione Covestro AG XS2188805688 in EUR 0.875%, scaduta

Covestro AG è una società chimica globale con sede in Germania, specializzata nella produzione di polimeri ad alte prestazioni, rivestimenti, materiali speciali e prodotti intermedi chimici.

The Obbligazione issued by Covestra AG ( Germany ) , in EUR, with the ISIN code XS2188805688, pays a coupon of 0.875% per year.
The coupons are paid 1 time per year and the Obbligazione maturity is 03/02/2026

Base Prospectus dated March 12, 2021
This document constitutes a base prospectus for the purposes of Art. 8(1) of Regulation (EU) 2017/1129 of the European Parliament and of
the Council of June 14, 2017 (the "Prospectus Regulation") relating to issues of non-equity securities ("Non-Equity Securities") within the
meaning of Art. 2(c) of the Prospectus Regulation under the Programme (as defined below) by Covestro AG.

COVESTRO AG
(incorporated in Germany as a stock corporation)
EUR 5,000,000,000 Debt Issuance Programme
Under this base prospectus (together with any documents incorporated by reference herein, the "Base Prospectus"), Covestro AG (the
"Issuer"), subject to compliance with all relevant laws, regulations and directives, may from time to time issue unsubordinated bearer
notes in a minimum denomination of EUR 1,000 per Note (together the "Notes"). The aggregate principal amount of Notes issued under
the Debt Issuance Programme described in this Base Prospectus (the "Programme") outstanding will not at any time exceed
EUR 5,000,000,000 (or the equivalent in other currencies).
The principal amount of the Notes, the issue currency, the interest payable in respect of the Notes, the issue prices and maturities of the
Notes and all other terms and conditions which are applicable to a particular Tranche of Notes (each term as defined below, see "General
description of the Programme") will be set out in the document containing the final terms (each "Final Terms") within the meaning of
Art. 8(4) of the Prospectus Regulation.
This Base Prospectus has been approved by the Luxembourg Commission de Surveillance du Secteur Financier (the "CSSF") as competent
authority under the Prospectus Regulation. The CSSF only approves this Base Prospectus as meeting the standards of completeness,
comprehensibility and consistency imposed by the Prospectus Regulation and gives no undertakings as to the economic and financial
soundness of the transaction or the quality or solvency of the Issuer in line with the provisions of article 6(4) of the Luxembourg act relating
to prospectuses for securities (loi relative aux prospectus pour valeurs mobilières) dated 16 July 2019 (the "Luxembourg Prospectus
Law"). Such approval should not be considered as an endorsement of the Issuer or of the quality of the Notes that are the subject of this
Base Prospectus. Investors should make their own assessment as to the suitability of investing in the Notes.
The Issuer has requested the CSSF to provide the competent authorities in the Federal Republic of Germany ("Germany"), the Republic
of Austria ("Austria") and The Netherlands with a certificate of approval attesting that this Base Prospectus has been drawn up in
accordance with the Prospectus Regulation. The Issuer may request the CSSF to provide competent authorities in additional host member
states within the European Economic Area with such notification.
Application has also been made to the Luxembourg Stock Exchange for Notes issued under the Programme to be listed on the official list
of the Luxembourg Stock Exchange (the "Official List") and to be admitted to trading on the Luxembourg Stock Exchange's regulated
market "Bourse de Luxembourg". The Luxembourg Stock Exchange's regulated market is a regulated market for the purposes of the
Markets in Financial Instruments Directive 2014/65/EU (as amended, "MiFID II"). However, Notes may be listed on any other stock
exchange or may be unlisted as specified in the relevant Final Terms.
This Base Prospectus and any supplement to this Base Prospectus will be published in electronic form together with all documents
incorporated by reference on the website of the Luxembourg Stock Exchange (www.bourse.lu) and on the website of the Issuer
(www.covestro.com). This Base Prospectus is valid for a period of twelve months after its approval. The validity ends upon expiration of
March 12, 2022.
The obligation to supplement this Base Prospectus in the event of significant new factors, material mistakes or material inaccuracies does
not apply when this Base Prospectus is no longer valid.
This Base Prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, the Notes in any jurisdiction where such
offer or solicitation is unlawful.
The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and
subject to certain exceptions, the Notes may not be offered or sold within the United States or to, or for the account or benefit of,
U.S. persons.
Prospective purchasers of the Notes should ensure that they understand the nature of the Notes and the extent of their exposure to risks and
that they consider the suitability of the Notes as an investment in light of their own circumstances and financial condition. Investing in the
Notes involves certain risks. Please review the section entitled "Risk Factors" beginning on page 9 of this Base Prospectus.
Arranger
Deutsche Bank
Dealers
BofA Securities
Citigroup
Deutsche Bank
J.P. Morgan
Société Générale Corporate &
UniCredit Bank
Investment Banking

RESPONSIBILITY STATEMENT
Covestro AG ("Covestro AG", or the "Issuer", together with its consolidated subsidiaries, the "Group") with its registered
office in Leverkusen, Germany accepts responsibility for the information contained in and incorporated by reference into this
Base Prospectus and for the information which will be contained in the Final Terms.
The Issuer accepts responsibility for the content of the Base Prospectus also with respect to the subsequent resale or final
placement of the Notes by any financial intermediary which was given consent to use the Base Prospectus.
The Issuer hereby declares that to the best of its knowledge, having taken all reasonable care to ensure that such is the case,
the information contained in this Base Prospectus for which it is responsible is in accordance with the facts and that this Base
Prospectus makes no omission likely to affect its import.
NOTICE
This Base Prospectus should be read and understood in conjunction with any supplement hereto and with any other documents
incorporated herein by reference (see "Documents Incorporated by Reference" below). Full information on the Issuer and any
Tranche of Notes is only available on the basis of the combination of the Base Prospectus any supplement thereto and the
relevant Final Terms.
No person has been authorised to give any information or to make any representation other than those contained in this Base
Prospectus in connection with the issue or sale of the Notes and, if given or made, such information or representation must not
be relied upon as having been authorised by the Issuer, the Arranger or any Dealer (as defined in "General Description of the
Programme").
Neither the Arranger nor any Dealer nor any other person mentioned in this Base Prospectus, excluding the Issuer, is
responsible for the information contained in this Base Prospectus or any supplement thereto, or any Final Terms or any other
document incorporated herein by reference, and accordingly, and to the extent permitted by the laws of any relevant
jurisdiction, none of these persons accepts any responsibility for the accuracy and completeness of the information contained
in any of these documents.
Neither the delivery of this Base Prospectus nor any sale made in connection herewith shall, under any circumstances, create
any implication that there has been no change in the affairs of the Issuer since the date hereof or the date upon which this Base
Prospectus has been most recently supplemented or that there has been no adverse change in the financial position of the Issuer
since the date hereof or the date upon which this Base Prospectus has been most recently supplemented or that any other
information supplied in connection with the Programme is correct as of any time subsequent to the date on which it is supplied
or, if different, the date indicated in the document containing the same.
The distribution of this Base Prospectus, any supplement thereto and the offering or sale of the Notes in certain jurisdictions
may be restricted by law. Persons into whose possession this Base Prospectus comes are required by the Issuer, the Arranger
and the Dealers to inform themselves about and to observe any such restriction.
The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act")
or with any securities regulatory authority of any state or other jurisdiction of the United States. The Notes will be issued in
bearer form and are subject to certain U.S. tax law requirements. Subject to certain exceptions, Notes may not be offered, sold
or delivered within the United States or to, or for the account or benefit of, any U.S. person. The term "U.S. person" has the
meaning ascribed to it in Regulation S under the Securities Act ("Regulation S") and the U.S. Internal Revenue Code of 1986,
as amended (the "Code") and regulations thereunder. The Notes are being offered and sold outside the United States to non-
U.S. persons pursuant to Regulation S and may not be legally or beneficially owned at any time by any U.S. person. For a
description of certain restrictions on offers and sales of Notes and on distribution of this Base Prospectus, see "Subscription
and Sale - Selling Restrictions".
Neither this Base Prospectus nor any supplement(s) thereto nor any Final Terms may be used for the purpose of an offer or
solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is
unlawful to make such an offer or solicitation.
Neither this Base Prospectus nor any supplement(s) thereto nor any Final Terms constitute an offer or an invitation to subscribe
for or purchase any Notes and should not be considered as a recommendation by the Issuer or any Dealer that any recipient of
this Base Prospectus or any Final Terms should subscribe for or purchase any Notes. Each recipient of this Base Prospectus or
any Final Terms shall be taken to have made its own investigation and appraisal of the condition (financial or otherwise) of
the Issuer.
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The language of the Base Prospectus except for the form of terms and conditions of the Notes (the "Terms and Conditions")
is English. The binding language of the terms and conditions of each Series of Notes will be specified in the respective Final
Terms.
Some figures (including percentages) in the Base Prospectus have been rounded in accordance with commercial rounding.
The information on any website referred to in this Base Prospectus does not form part of the Base Prospectus and has not been
scrutinized or approved by the CSSF unless that information is incorporated by reference into the Base Prospectus.
MIFID II PRODUCT GOVERNANCE / TARGET MARKET
The Final Terms in respect of any Notes may include a legend entitled "MiFID II Product Governance" which will outline the
target market assessment in respect of the Notes and which channels for distribution of the Notes are appropriate. Any person
subsequently offering, selling or recommending the Notes (a "distributor") should take into consideration the target market
assessment; however, a distributor subject to Directive 2014/65/EU (as amended, "MiFID II") is responsible for undertaking
its own target market assessment in respect of the Notes (by either adopting or refining the target market assessment) and
determining appropriate distribution channels.
A determination will be made in relation to each issue about whether, for the purpose of the MiFID Product Governance rules
under EU Delegated Directive 2017/593 (the "MiFID Product Governance Rules"), any Dealer subscribing for any Notes is
a manufacturer in respect of such Notes, but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates
will be a manufacturer for the purpose of the MiFID Product Governance Rules.
UK MIFIR PRODUCT GOVERNANCE / TARGET MARKET
The Final Terms in respect of any Notes may include a legend entitled "UK MiFIR Product Governance" which will outline
the target market assessment in respect of the Notes and which channels for distribution of the Notes are appropriate. Any
person subsequently offering, selling or recommending the Notes (a "distributor") should take into consideration the target
market assessment; however, a distributor subject to the FCA Handbook Product Intervention and Product Governance
Sourcebook (the "UK MiFIR Product Governance Rules") is responsible for undertaking its own target market assessment
in respect of the Notes (by either adopting or refining the target market assessment) and determining appropriate distribution
channels.
A determination will be made in relation to each issue about whether, for the purpose of the UK MiFIR Product Governance
Rules, any Dealer subscribing for any Notes is a manufacturer in respect of such Notes, but otherwise neither the Arranger nor
the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the UK MIFIR Product Governance
Rules.
PRIIPS REGULATION / EEA RETAIL INVESTORS
If the Final Terms in respect of any Notes include a legend entitled "Prohibition of Sales to EEA Retail Investors", the Notes
are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available
to any retail investor in the European Economic Area ("EEA"). For these purposes, a retail investor means a person who is
one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (ii) a customer within the meaning
of Directive 2016/97/EU as amended (the "Insurance Distribution Directive"), where that customer would not qualify as a
professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the
Prospectus Regulation. Where such a Prohibition of Sales to EEA Retail Investors is included in the Final Terms, no key
information document required by Regulation (EU) No 1286/2014 (as amended, the "PRIIPs Regulation") for offering or
selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering
or selling such Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs
Regulation.
UK PRIIPS REGULATION / UK RETAIL INVESTORS
If the Final Terms in respect of any Notes include a legend entitled "Prohibition of Sales to UK Retail Investors", the Notes
are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available
to any retail investor in the United Kingdom ("UK"). For the purposes of this provision the expression "retail investor" means
a person who is one (or more) of the following: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU)
No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 ("EUWA"); or (ii) a
customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (the "FSMA") and any rules
or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a
professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by
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virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of the Prospectus Regulation as it forms part of
domestic law by virtue of the EUWA. Where such a Prohibition of Sales to UK Retail Investors is included in the Final Terms,
no key information document required by Regulation (EU) No 1286/2014 as it forms part of domestic law by virtue of the
EUWA (the "UK PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail investors
in the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail
investor in the UK may be unlawful under the UK PRIIPs Regulation.
CANADA INVESTORS
The Notes may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors,
as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are
permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant
Obligations. Any resale of the Notes must be made in accordance with an exemption from, or in a transaction not subject to,
the prospectus requirements of applicable securities laws. Securities legislation in certain provinces or territories of Canada
may provide a purchaser with remedies for rescission or damages if this Base Prospectus (including any amendment thereto)
contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the
time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any
applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or
consult with a legal advisor. Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of
a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the Dealers are
not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection
with this offering.
NOTIFICATION UNDER SECTION 309B(1) OF THE SECURITIES AND FUTURES ACT (CHAPTER 289) OF
SINGAPORE (THE "SFA")
Unless otherwise stated in the Final Terms in respect of any Notes, all Notes issued or to be issued under the Programme shall
be prescribed capital markets products (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018)
and Excluded Investment Products (as defined in the Monetary Authority of Singapore (the "MAS") Notice SFA 04-N12:
Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).
BENCHMARK REGULATION / STATEMENT IN RELATION TO ADMINISTRATOR'S REGISTRATION
Interest amounts payable under floating rate notes issued under this Programme are calculated by reference to EURIBOR
(Euro Interbank Offered Rate) which is provided by the European Money Markets Institute (EMMI). As at the date of this
Base Prospectus, EMMI appears on the register of administrators and benchmarks established and maintained by the European
Securities and Markets Authority (ESMA) pursuant to Article 36 of the Regulation (EU) 2016/1011 of the European Parliament
and of the Council of 8 June 2016, as amended ("Benchmark Regulation").
STABILISATION
In connection with the issue of any Tranche of Notes under the Programme, the Dealer or Dealers (if any) named as stabilising
manager(s) in the applicable Final Terms (or persons acting on behalf of a stabilising manager) may over-allot Notes or effect
transactions with a view to supporting the price of the Notes at a level higher than that which might otherwise prevail. However,
stabilisation may not necessarily occur. Any stabilisation action may begin on or after the date on which adequate public
disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may cease at any time, but it must
end no later than the earlier of 30 days after the Issue Date of the relevant Tranche of Notes and 60 days after the date of the
allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the relevant
stabilising manager(s) (or person(s) acting on behalf of any stabilising manager(s)) in accordance with all applicable laws and
rules.
FORWARD-LOOKING STATEMENTS
This Base Prospectus contains certain forward-looking statements. A forward-looking statement is a statement that does not
relate to historical facts and events. They are based on analyses or forecasts of future results and estimates of amounts not yet
determinable or foreseeable. These forward-looking statements are identified by the use of terms and phrases such as
"anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will" and similar terms
and phrases, including references and assumptions. This applies, in particular, to statements in this Base Prospectus containing
information on future earning capacity, plans and expectations regarding the Group's business and management, its growth
and profitability, and general economic and regulatory conditions and other factors that affect it.
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Forward-looking statements in this Base Prospectus are based on current estimates and assumptions that the Issuer makes to
the best of its present knowledge. These forward-looking statements are subject to risks, uncertainties and other factors which
could cause actual results, including the Group's financial condition and results of operations, to differ materially from and be
worse than results that have expressly or implicitly been assumed or described in these forward-looking statements. The
Group's business is also subject to a number of risks and uncertainties that could cause a forward-looking statement, estimate
or prediction in this Base Prospectus to become inaccurate. Accordingly, investors are strongly advised to read the following
sections of this Base Prospectus: "Risk Factors" and "Description of the Issuer and the Group". These sections include more
detailed descriptions of factors that might have an impact on the Group's business and the markets in which it operates.
In light of these risks, uncertainties and assumptions, future events described in this Base Prospectus may not occur. In addition,
neither the Issuer nor the Dealers assume any obligation, except as required by law, to update any forward-looking statement
or to conform these forward-looking statements to actual events or developments.
ESG RATINGS
The Issuer's exposure to Environmental, Social and Governance ("ESG") risks and the related management arrangements
established to mitigate those risks has been assessed by several agencies, including EcoVadis, ISS ESG, MSCI and
Sustainalytics, among others, through Environmental, Social and Governance ratings ("ESG ratings"). Please refer to the
section "Description of the Issuer and the Group - Sustainability" for further information.
ESG ratings may vary amongst ESG ratings agencies as the methodologies used to determine ESG ratings may differ.
The Issuer's ESG ratings are not necessarily indicative of its current or future operating or financial performance, or any future
ability to service the Notes and are only current as of the dates on which they were initially issued. Prospective investors must
determine for themselves the relevance of any such ESG ratings information contained in this Base Prospectus or elsewhere
in making an investment decision. Furthermore, ESG ratings shall not be deemed to be a recommendation by the Issuer, the
Dealers or any other person to buy, sell or hold the Notes. Currently, the providers of such ESG ratings are not subject to any
regulatory or other similar oversight in respect of their determination and award of ESG ratings. For more information
regarding the assessment methodologies used to determine ESG ratings, please refer to the relevant ratings agency's website
(which website does not form a part of, nor is incorporated by reference in, this Base Prospectus).

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TABLE OF CONTENTS
Page
GENERAL DESCRIPTION OF THE PROGRAMME ............................................................................................................. 7
RISK FACTORS ....................................................................................................................................................................... 9
ISSUE PROCEDURES ........................................................................................................................................................... 28
TERMS AND CONDITIONS OF THE NOTES ..................................................................................................................... 30
FORM OF FINAL TERMS ..................................................................................................................................................... 87
DESCRIPTION OF THE ISSUER AND THE GROUP ....................................................................................................... 109
USE OF PROCEEDS ............................................................................................................................................................ 138
TAXATION WARNING ...................................................................................................................................................... 139
SUBSCRIPTION AND SALE .............................................................................................................................................. 140
GENERAL INFORMATION ................................................................................................................................................ 144
DOCUMENTS INCORPORATED BY REFERENCE ......................................................................................................... 146
NAMES AND ADDRESSES ................................................................................................................................................ 148

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GENERAL DESCRIPTION OF THE PROGRAMME
General
Under the Programme, Covestro AG, subject to compliance with all relevant laws, regulations and directives, may from time
to time issue notes (the "Notes") to one or more of the following Dealers: BofA Securities Europe SA, Citigroup Global
Markets Europe AG, Citigroup Global Markets Limited, Deutsche Bank Aktiengesellschaft, J.P. Morgan AG, Société
Générale, UniCredit Bank AG and any additional Dealer appointed under the Programme from time to time by the Issuer
which appointment may be for a specific issue or on an ongoing basis (together, the "Dealers").
Deutsche Bank Aktiengesellschaft acts as arranger in respect of the Programme (the "Arranger").
Deutsche Bank Aktiengesellschaft will also act as fiscal agent (the "Fiscal Agent") and paying agent (the "Paying Agent").
The aggregate principal amount of the Notes outstanding at any one time under the Programme will not exceed
EUR 5,000,000,000 (or its equivalent in any other currency) (the "Programme Amount"). The Issuer may increase the
Programme Amount in accordance with the terms of the Dealer Agreement (as defined herein) from time to time.
Prospectus
Notes issued under the Programme may be issued either: (1) pursuant to this Base Prospectus and associated Final Terms; or
(2) pursuant to a Specific Prospectus (as defined below); or (3) in relation to Notes not publicly offered in, and not admitted
to trading on a regulated market of, any member state of the European Economic Area, in such form as agreed between the
Issuer, the relevant Dealer(s) and, if relevant for the Fiscal Agent, the Fiscal Agent.
"Specific Prospectus" means any prospectus prepared by the Issuer in relation to Notes issued under the Programme and
having terms not contemplated by the Base Prospectus as Option I or Option II, which may incorporate by reference certain
parts of the Base Prospectus and which constitutes a prospectus for the purposes of Article 6 para. 3 of the Prospectus
Regulation, including any documents which are from time to time incorporated by reference in the Specific Prospectus, as
such Specific Prospectus is amended, supplemented or replaced from time to time.
Issues of Notes
Notes may be issued on a continuing basis to one or more of the Dealers.
The Notes issued under this Base Prospectus will be issued as fixed rate (the "Fixed Rate Notes") or floating rate notes (the
"Floating Rate Notes").
Notes will be issued in series (each a "Series") having one or more issue dates and on terms otherwise identical (or identical
other than in respect of the first payment of interest), the Notes of each Series being intended to be interchangeable with all
other Notes of that Series. Each Series may be issued in tranches (each a "Tranche") on the same or different issue dates. The
specific terms of each Tranche (which will be completed, where necessary, with the relevant Terms and Conditions and, save
in respect of the issue date, issue price, first payment of interest and nominal amount of the Tranche, will be identical to the
terms of other Tranches of the same Series) will be completed in the final terms.
Notes of any Tranche may be issued at a price (the "Issue Price") equal to their principal amount or at a discount or premium
to their principal amount. The Issue Price for the Notes of any Tranche issued on a syndicated basis will be determined at the
time of pricing on the basis of a yield which will be determined on the basis of the orders of the investors which are received
by the Dealers during the placement of such Notes. Orders will specify a minimum yield and may only be confirmed at or
above such yield. The resulting yield will be used to determine the Issue Price.
Notes will be issued in such denominations as may be agreed between the Issuer and the relevant Dealer(s) and as indicated
in the applicable Final Terms save that the minimum denomination of the Notes will be, if in euro, EUR 1,000, and, if in any
currency other than euro, an amount in such other currency at least equivalent to EUR 1,000 at the time of the issue of Notes.
Subject to any applicable legal or regulatory restrictions, and requirements of relevant central banks, Notes may be issued in
euro or any other currency.
Notes will be issued with such maturities as may be agreed between the Issuer and the relevant Dealer(s), subject to such
minimum or maximum maturities as may be allowed or required from time to time by any laws, regulations and directives
applicable to the Issuer or the relevant currency.
The principal amount of the Notes, the currency, the interest payable in respect of the Notes, if any, the Issue Price and
maturities of the Notes which are applicable to a particular Tranche will be set out in the relevant Final Terms.
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The yield for Notes with fixed interest rates will be calculated by the use of the International Capital Market Association
("ICMA") method, which determines the effective interest rate of notes taking into account accrued interest on a daily basis.
Each Tranche of Notes will be represented on issue by a temporary global note (each a "Temporary Global Note"). Interests
in a Temporary Global Note will be exchangeable, in whole or in part, for interest in a permanent global note (each a
"Permanent Global Note") on or after the date 40 days after the later of the commencement of the offering and the relevant
issue date (the "Exchange Date"), upon certification as to non-U.S. beneficial ownership.
The Notes will be freely transferable in accordance with the rules and regulations of the relevant Clearing System.
Distribution of Notes
Notes may be distributed by way of public offer or private placements and, in each case, on a syndicated or non-syndicated
basis. The method of distribution of each Tranche will be stated in the relevant Final Terms. The Notes may be offered to
qualified and non-qualified investors.
The Issuer has requested the CSSF to provide the competent authorities in Germany, Austria and The Netherlands with a
certificate of approval attesting that this Base Prospectus has been drawn up in accordance with the Prospectus Regulation.
The Issuer may request the CSSF to provide competent authorities in additional host member states within the European
Economic Area with such notification. The Notes may be offered to the public in Luxembourg and, following notification, in
Germany, Austria and The Netherlands and in any such other additional host member state.
The offer and distribution of any Notes of any Tranche will be subject to selling restrictions, including those for the United
States, the European Economic Area and the United Kingdom. See "Subscription and Sale" below.
The Final Terms in respect of any Notes may include a legend entitled "MiFID II Product Governance" and/or "UK MiFIR
Product Governance" which will outline the target market assessment in respect of the Notes and which channels for
distribution of the Notes are appropriate. Any person subsequently offering, selling or recommending the Notes (a
"distributor") should take into consideration the target market assessment; however, a distributor subject to MiFID II and/or
the FCA Handbook Product Intervention and Product Governance Sourcebook is responsible for undertaking its own target
market assessment in respect of the Notes (by either adopting or refining the target market assessment) and determining
appropriate distribution channels.
Listing of Notes and Admission to Trading
Application has also been made to the Luxembourg Stock Exchange for Notes issued under the Programme to be listed on the
official list of the Luxembourg Stock Exchange (the "Official List") and to be admitted to trading on the Luxembourg Stock
Exchange's regulated market "Bourse de Luxembourg", appearing on the list of regulated markets issued by the European
Commission. The Luxembourg Stock Exchange's regulated market is a regulated market included on the list of regulated
markets published by ESMA for the purposes of MiFID II. However, Notes may be listed on any other stock exchange, subject
to the notification of the Base Prospectus in accordance with Art. 25 of the Prospectus Regulation, or may be unlisted as
specified in the relevant Final Terms.
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RISK FACTORS
Before deciding to purchase Notes issued under the Programme, investors should carefully review and consider the following
risk factors and the other information contained in this Base Prospectus. Should one or more of the risks described below
materialize, this may have a material adverse effect on the business, prospects, shareholders' equity, assets, financial position
and results of operations (Vermögens-, Finanz- und Ertragslage) or general affairs of Covestro AG or the Group. Moreover,
if any of these risks occur, the market value of Notes issued under the Programme and the likelihood that the Issuer will be in
a position to fulfil its payment obligations under Notes issued under the Programme may decrease, in which case the holders
of Notes (the "Noteholders") issued under the Programme could lose all or part of their investments. Factors which the Issuer
believes may be material for the purpose of assessing the risks associated with Notes issued under the Programme are also
described below.
The Issuer believes that the factors described below represent the principal risks inherent in investing in Notes issued under
the Programme, but the Issuer may be unable to pay interest, principal or other amounts on or in connection with Notes issued
under the Programme for other unknown reasons than those described below. Additional risks of which the Issuer is not
presently aware could also affect the business operations of Covestro AG or the Group and have a material adverse effect on
their business activities, financial condition and results of operations. Prospective investors should read the detailed
information set out elsewhere in this Base Prospectus (including any documents incorporated by reference herein) and reach
their own views prior to making any investment decision.
The following risk factors are organized in categories depending on their respective nature. In each category the most material
risk factors, based on the probability of their occurrence and the expected magnitude of their negative impact, are mentioned
first.
Words and expressions defined in the Terms and Conditions shall have the same meanings in this section.
RISK FACTORS RELATING TO THE ISSUER AND THE GROUP
The risk factors relating to the Issuer and the Group are presented in categories depending on their nature with the most
material risk factor presented first in each category:
Market Risks
The Group is affected by volatile economic conditions and the development of its customers' cyclical end markets.
General economic conditions affect the polymer industry, including the polyurethanes, polycarbonates and coatings, adhesives
and sealants industry segments in which the Group operates. Due to the Group's significant fixed cost base, a decrease in sales
volume could have a material adverse impact on the Group's results of operations. If gross domestic product ("GDP") declines,
the Group typically experiences a greater decline in sales.
The Group's results of operations are substantially dependent on regional economic conditions in Europe, the Middle East,
Africa and Latin America excluding Mexico ("EMLA"), Asia and the Pacific ("APAC"), and the United States, Canada and
Mexico ("NAFTA") and in certain emerging economies that are generally more volatile than developed markets.
Uncertain global economic factors and changes in GDP growth in key countries make it difficult for the Group to forecast
demand trends for its products and its profitability. It can be difficult to accurately predict the development of factors affecting
the industry segments.
The Group is highly dependent on demand in the end markets in which the Group's customers operate, in particular the
automotive/transport, construction, wood/furniture, electrical/electronics and chemicals end markets, which together account
for a majority of the Group's total net sales. A smaller portion of the Group's total net sales are attributable to sales in the
sports/leisure, cosmetics, health and other end markets. Since the Group's business is characterized by high fixed costs, any
material decline in demand in one of the Group's core end markets that results in falling production volumes will decrease the
Group's earnings.
The Group's end markets are cyclical in nature; however, the level of cyclicality differs by end market and region. The level
of activity in the Group's end markets is generally affected by economic developments (including GDP growth and disposable
income) as well as a wide range of other factors beyond the control of the Group and its customers.
Customers of chemical and polymer companies such as the Group typically adapt their procurement activities to the expected
growth rates in their relevant end market. In an actual or expected economic downturn, customers try to reduce their working
capital and their inventories, which can lead to a significant decline in the Group's sales volumes and net sales. In times of
recovery, customers tend to increase their inventories, leading to increased demand for the Group's products.
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Future market developments, including expected net sales and results of operations, are difficult to forecast because of the
cyclical nature of the end markets and other factors beyond the Group's control. Furthermore, the Group's results of operations
are highly correlated with volume, prices, raw material and energy costs as well as production capacity utilization within the
polyurethanes and polycarbonates segments of the polymer industry and of its production facilities, all of which are difficult
to project and could materially adversely affect the Group's ability to predict future financial results and plan capital
expenditures accurately.
A decline in demand in any of the Group's end markets, even during periods of strong general economic conditions, may
materially adversely affect the Group's business, financial condition, results of operations and prospects.
The polymer industry is characterized by periods of supply/demand imbalances due to production overcapacity that will
result in periodic downward pressure on prices and short-term price volatility.
Historically, the markets for most of the Group's products have experienced alternating periods of tight supply, causing prices
and profit margins to increase, followed by periods of significant capacity additions, resulting in oversupply and declining
prices and profit margins. The cycles often occur on short notice and are in part caused by the capacity additions of new
world-scale production facilities or the expansion of existing production facilities, which are necessary to create or sustain
economies of scale, and the decline of industry-wide utilization rates that often follows capacity additions.
Any oversupply may lead to a decline in capacity utilization rates of the entire industry and, in particular, the Group, which
may negatively impact profit margins due to the high fixed cost base of production facilities. The materially adverse effects of
supply and demand imbalances can be significantly exacerbated by economic conditions.
The Group expects that competitors from developed as well as emerging economies will continue to add production capacity.
In addition, the Group has planned to increase its production of certain products in the short term.
Moreover, the construction of new production facilities, or the expansion of capacity at existing production facilities, often
begins years in advance of that capacity entering operation. Accordingly, there is a risk that such new capacity eventually
enters operation when economic conditions are weak which may further depress prices and profit margins. The materially
adverse effects of supply and demand imbalances can be significantly exacerbated by economic conditions.
In addition, other factors largely beyond the Group's control, such as the actual or perceived changes in levels of supply and
demand, the availability and cost of substitute materials and inventory maintained by competitors, all influence product prices
and may lead to short-term price volatility and a downward pressure on prices, which may ultimately decrease the Group's
margins. Levels of supply in the industry segments that outpace demand for products, such as those produced by the Group,
can materially adversely affect the Group's ability to generate profit and materially adversely affect the Group's business,
financial condition, results of operations and prospects.
Fluctuations in the prices of raw materials or energy and any disruptions in the supply or logistic chain could have a
material adverse effect on the Group's business, financial condition and results of operations.
The Group's production processes are dependent on the availability and timely delivery of raw materials and such materials
constitute a large proportion of the Group's total production costs. The Group's primary raw materials are petrochemical
derivatives, such as benzene and phenol, propylene oxide, toluene, acetone, hexamethylenediamine ("HDA").
The extent of the impact of price fluctuations in raw materials on the Group's net sales and results of operations depends
primarily on whether the Group is able to pass on increases in raw material prices to its customers through higher selling prices
without significant delays or to maintain its selling prices despite decreases in raw material prices. The Group's ability to do
so primarily depends on the conditions of supply and demand in the industry and resulting industry capacity utilization as well
as competition. Oversupply and low utilization of the production capacity in the industry have affected and will continue to
affect the Group's ability to pass on increases in raw material prices to its customers, which negatively affects the Group's
margins.
As the Group's primary raw materials are petrochemical derivatives, their prices are typically determined based on the price
of crude oil, which generally creates the floor for prices of petrochemical derivatives, and the supply and demand dynamics
for the relevant raw material. Political instabilities, wars or other conflicts with oil producing or refining countries could
negatively affect the supply of oil and result in a significant increase in prices for oil and petrochemical derivatives.
In addition to raw materials, the Group requires large quantities of energy from various sources for use in its production
operations, the most important of which are electricity, natural gas and steam. The Group's energy costs are affected by various
factors, including the availability of supplies of particular sources of energy, energy prices and regulatory decisions. The
competitiveness of the Group's production facilities in EMLA, APAC and NAFTA depend on whether the Group has access
to energy at competitive rates. Any significant increase in energy prices, transportation costs, grid fees or taxes associated with
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