As a result of borrowings undertaken for the acquisition of TMK IPSCO in 2008 and TMK GIPI in 2012, as well as a result of large-scale capital expenditure program, our leverage remains significant. As of 31 December 2013, our total debt amounted to 3,694 mln USD as compared to 3,885 mln USD at the end of 2012. The decrease of our total debt in 2013 was attributable for Net repayment in the amount of 93 mln USD and for the depreciation of the Rouble against the U.S. dollar. As of 31 December 2013, our Net-Debt-to-EBITDA ratio was 3.8.
In 2013, we continued to concentrate on improving our liquidity profile and optimizing financial performance. We negotiated extensions of credit terms and lower interest rates in order to improve our financial position and overall debt maturity profile. In April 2013, we completed a placement of 500 mln USD Eurobonds maturing in 2020 to refinance part of our debt. As a result of measures for improvement of loan portfolio structure the share of our short-term debt decreased to 11% as of 31 December 2013 compared to 28% as of 31 December 2012.
Improving liquidity profile remains one of our priorities, and we continue to carry out measures to maintain sufficient liquidity and improve loan portfolio structure. As of 31 December 2013, we had committed credit lines in Russian, European and American banks with the available limit of 1,619 mln USD.
Nevertheless, there can be no assurance that our efforts to improve liquidity profile and reduce leverage will prove successful. The negative market reaction on deteriorating global financial situation may have an adverse impact on our ability to borrow in banks or capital markets, and may put pressure on our liquidity, increase borrowing costs, temporary reduce the availability of credit lines and lead to unavailability of financing on acceptable terms.
Compliance with covenants
Certain of our loan agreements and public debt securities currently include financial covenants. Some covenants are set in relation to leverage, total indebtedness and tangible net worth, and impose financial ratios that must be maintained. Other covenants impose restrictions in respect of certain transactions, including restrictions in respect of indebtedness. A breach of a financial or other covenant in existing debt facilities, if not resolved by means such as obtaining a waiver from the relevant lender, could trigger a default under our obligations.
We strictly maintain incurrence covenants under our public debt securities and covenants under loan agreements. As of 31 December 2013, we were in compliance with lenders’ requirements and covenants.
Nevertheless, in case financial markets or economic environment deteriorate in the future, we may not comply with relevant covenants. Though, historically, we have successfully secured from the relevant lenders all necessary waivers or standstill letters to address possible breaches of financial covenants we may not be able to secure such necessary waivers or standstill letters during future reporting periods if not in compliance with financial covenants. We do not expect the occurrence of such events in the near future.
Interest rate risk
Interest expenses are the prevailing part of our finance costs. In 2013, our finance costs decreased 15% or 45 mln USD and amounted to 252 mln USD as compared to 297 mln USD in 2012. Our weighted average nominal interest rate as of 31 December 2013 decreased by 27 basis points as compared to 31 December 2012. Although we currently benefit from relatively low interest rates, there can be no assurance that rates will stay low in the future. The cost of funding for Russian and international banks may increase in the future, which can increase our interest expense and adversely affect our financial position.
Additionally, certain part of our loan portfolio is represented by loans taken out at floating interest rates. As of 31 December 2013, loans with floating interest rates represented 579 mln USD. The underlying rates in current loans with floating interest rates are LIBOR and EURIBOR. In 2012, taking into account low levels of interest rates which were close to its historical levels, we hedged a part of interest rate risks. Considering hedging, at the end of 2013 the share of variable-rate debt amounted to 9% of our total credit portfolio. Nevertheless, several loans with floating interest rates still exist in our credit portfolio and, should floating interest rates increase in the future, interest expenses on relevant loans will increase.
Our products are typically priced in Roubles for Russian sales and in U.S. dollars and Euros for CIS, U.S. and other international sales. Our direct costs, including raw materials, labour and transportation costs are largely incurred in Roubles and U.S. dollars. Other costs, such as interest expense, are currently incurred largely in U.S. dollars and roubles, and capital expenditures are incurred principally in Roubles, Euros and U.S. dollars.
We hedge our net investment in operations located in the United States and Oman against foreign currency risks using U.S. dollar denominated liabilities. Gains or losses on the hedging instruments relating to the effective portion of the hedge are recognised as other comprehensive income while any gains or losses relating to the ineffective portion are recognised in the income statement. In 2013, we incurred foreign exchange losses from spot rate changes in the total amount of 131 mln USD, including 49 mln USD recognised in the income statement and 82 mln USD (before income tax) recognised in the statement of comprehensive income.
The Rouble remains volatile. Our debt is currently largely denominated in U.S. dollars, and the depreciationof the Rouble against the U.S. dollar in the future could result in foreign exchange losses. The share of U.S. dollar denominated loans in the loan portfolio in 2013 equaled to 64% as of 31 December 2013 as compared to 48% as of 31 December 2012. Since revenue of the Group is nominated in Euros, the U.S. dollar and Russian rouble due to the geographic diversification of sales, this provides a natural hedge for our foreign exchange position. Nevertheless, depreciation of the Rouble against the U.S. dollar could adversely affect our net profit as coherent losses will be reflected in our consolidated income statements.
A significant amount of our production activities are located in Russia, and a majority of direct costs are incurred in Russian roubles. We tend to experience inflation-driven increases in certain costs, such as raw material costs, transportation costs, energy costs and salaries that are linked to the general price level in Russia. In 2013, inflation in Russia reached 6.5% as compared to 6.6% in 2012. In spite of the intention of the Russian government to reduce rates of inflation in the coming years, inflation may increase in the future. We may not be able to increase the prices sufficiently in order to preserve existing operating margins.
Inflation rates in the United States, with respect to TMK IPSCO operations, are historically much lower than in Russia. In 2013, inflation in the United States decreased to 1.5% in comparison to 1.7% in 2012. High rates of inflation, especially in Russia, could increase our costs, decrease our operating margins and materially adversely affect our business and financial position.