Liquidity risk

Liquidity risk is the risk that new financial resources may not be available (funding liquidity risk) or that the Company may be unable to convert assets into cash on the market (asset liquidity risk), meaning that it cannot meet its payment commitments. This may affect profit or loss should the Company be obliged to incur extra costs to meet its commitments or, in extreme cases, lead to insolvency and threaten the Company’s future as a going concern.

Snam’s risk management system aims to establish, under the financial plan, a financial structure that, in line with the business objectives, ensures sufficient liquidity for the group, minimising the relative opportunity cost and maintaining balance in terms of the duration and composition of the debt.

As shown in the section “Interest rate risk”, when implementing the debt refinancing programme, the Company had access to a wide range of funding sources through the credit system and the capital markets (bond loans, bilateral contracts, pool financing with major domestic and international banks, and loan contracts with the EIB).

Snam’s objective is to gradually achieve a balanced debt structure, in terms of the relative proportions of bonds and bank credit and the availability of usable committed bank credit lines, in line with its business profile and the regulatory environment in which it operates.

At 31 December 2014, Snam had unused committed long-term credit lines worth approximately €3.9 billion. At the same date, in addition to the funding from the banking system, the Euro Medium Term Notes (EMTN) programme⁶⁵ has allowed for the issuance, by 30 June 2015, of additional bonds worth up to €1.55 billion⁶⁶, to be placed with institutional investors.