Quarterly report pursuant to Section 13 or 15(d)

DEBT AND FINANCING ARRANGEMENTS

v3.23.3
DEBT AND FINANCING ARRANGEMENTS
 9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
DEBT AND FINANCING ARRANGEMENTS DEBT AND FINANCING ARRANGEMENTS The carrying value of our outstanding debt obligations as of September 30, 2023 and December 31, 2022 consisted of the following (in millions):
Principal
Amount		 Carrying Value
Maturity 2023 2022
Commercial paper $ 461  2023-2024 $ 458  $ — 
Fixed-rate senior notes:
2.500% senior notes
 $ —  2023 $ —  $ 999 
2.800% senior notes
 500  2024 499  499 
2.200% senior notes
 400  2024 400  399 
3.900% senior notes
 1,000  2025 998  997 
2.400% senior notes
 500  2026 499  499 
3.050% senior notes
 1,000  2027 996  995 
3.400% senior notes
 750  2029 747  747 
2.500% senior notes
 400  2029 398  397 
4.450% senior notes
 750  2030 745  744 
4.875% senior notes
 900  2033 894  — 
6.200% senior notes
 1,500  2038 1,485  1,485 
5.200% senior notes
 500  2040 494  494 
4.875% senior notes
 500  2040 491  491 
3.625% senior notes
 375  2042 369  369 
3.400% senior notes
 500  2046 492  492 
3.750% senior notes
 1,150  2047 1,138  1,137 
4.250% senior notes
 750  2049 743  743 
3.400% senior notes
 700  2049 689  688 
5.300% senior notes
 1,250  2050 1,231  1,231 
5.050% senior notes
 1,100  2053 1,083  — 
Floating-rate senior notes:
Floating-rate senior notes —  2023 —  500 
Floating-rate senior notes 1,566  2049-2073 1,549  1,027 
Debentures:
7.620% debentures
 276  2030 280  280 
Pound Sterling notes:
5.500% notes
 81  2031 81  79 
5.125% notes
 555  2050 527  521 
Euro senior notes:
0.375% senior notes
 741  2023 741  745 
1.625% senior notes
 741  2025 739  744 
1.000% senior notes
 530  2028 527  531 
1.500% senior notes
 530  2032 527  530 
Canadian senior notes:
2.125% senior notes
 556  2024 555  553 
Finance lease obligations 425  2023-2046 425  390 
Facility notes and bonds 320  2029-2045 320  320 
Other debt 5  2023-2026 5  36 
Total debt $ 21,312  21,125  19,662 
Less: current maturities (2,243) (2,341)
Long-term debt $ 18,882  $ 17,321 
Commercial Paper
We are authorized to borrow up to $10.0 billion under a U.S. commercial paper program and €5.0 billion (in a variety of currencies) under a European commercial paper program. As of September 30, 2023, we had $458 million outstanding under our U.S. commercial paper program, with an average interest rate of 5.32%. The amount of commercial paper outstanding is expected to fluctuate. As of September 30, 2023, we have classified the entire commercial paper balance as a current liability on our consolidated balance sheet. There was no commercial paper outstanding at December 31, 2022.
Debt Classification
We have classified certain floating-rate senior notes that are redeemable at the option of the note holder as long-term liabilities in our consolidated balance sheets, due to our intent and ability to refinance the debt if the put option is exercised.
Debt Repayments
During the nine months ended September 30, 2023, we repaid approximately $23 million of foreign-currency-denominated debt assumed in the Bomi Group acquisition.
On April 1, 2023, our 2.500% Senior Notes with a principal balance of $1.0 billion and our floating rate senior notes with a principal balance of $500 million matured and were repaid in full.
Debt Issuances
On February 23, 2023, we issued two series of notes in the principal amounts of $900 million and $1.1 billion. These notes bear interest at 4.875% and 5.050%, respectively, and mature on March 3, 2033 and March 3, 2053, respectively. Interest on the notes is payable semi-annually, beginning September 2023. Each series of notes is callable at our option at a redemption price equal to the greater of 100% of the principal amount, or the sum of the present values of scheduled payments of principal and interest, plus accrued and unpaid interest.
On March 7, 2023, we issued floating rate senior notes with a principal balance of $529 million. These notes bear interest at a rate equal to the compounded Secured Overnight Financing Rate ("SOFR") less 0.350% per year and mature on March 15, 2073. These notes are callable at various times after 30 years at a stated percentage of par value and are redeemable at the option of the note holders at various times after one year at a stated percentage of par value.
Reference Rate Reform
Our floating-rate senior notes that mature between 2049 and 2067 bore interest at rates that referenced the London Interbank Offer Rate ("LIBOR") for U.S. Dollars. As part of a broader program of reference rate reform, U.S. Dollar LIBOR rates ceased to be published after June 2023. Beginning July 1, 2023, we transitioned these notes to an alternative reference rate, SOFR, which was adopted in accordance with recommendations of the Alternative Reference Rates Committee.
Sources of Credit
We maintain two credit agreements with a consortium of banks. The first of these agreements provides revolving credit facilities of $1.0 billion, and expires on December 5, 2023. Amounts outstanding under this agreement bear interest at a periodic fixed rate equal to the term SOFR rate, plus 0.10% per annum and an applicable margin based on our then-current credit rating. The applicable margin from the credit pricing grid as of September 30, 2023 was 0.70%. Alternatively, a fluctuating rate of interest equal to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in the United States; (2) the Federal Funds effective rate plus 0.50%; or (3) the Adjusted Term SOFR Rate for a one-month interest period plus 1.00%, may be used at our discretion. We expect to renew this credit agreement in the fourth quarter of 2023 on substantially similar terms.
The second agreement provides revolving credit facilities of $2.0 billion, and expires on December 7, 2026. Amounts outstanding under this facility bear interest at a periodic fixed rate equal to the term SOFR rate plus 0.10% per annum and an applicable margin based on our then-current credit rating. The applicable margin from the credit pricing grid as of September 30, 2023 was 0.875%. Alternatively, a fluctuating rate of interest equal to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in the United States; (2) the Federal Funds effective rate plus 0.50%; or (3) the Adjusted Term SOFR Rate for a one-month interest period plus 1.00%, plus an applicable margin, may be used at our discretion.
If the credit ratings established by Standard & Poor's and Moody's differ, the higher rating will be used, except in cases where the lower rating is two or more levels lower. In these circumstances, the rating one step below the higher rating will be used. We are also able to request advances under these facilities based on competitive bids for the applicable interest rate.
There were no amounts outstanding under these facilities as of September 30, 2023.
Debt Covenants
Our existing debt instruments and credit facilities subject us to certain financial covenants. As of September 30, 2023, and for all prior periods presented, we have satisfied these financial covenants. These covenants limit the amount of secured indebtedness that we may incur, and limit the amount of attributable debt in sale-leaseback transactions, to 10% of net tangible assets. As of September 30, 2023, 10% of net tangible assets was equivalent to $4.7 billion and we had no covered sale-leaseback transactions or secured indebtedness outstanding. We do not expect these covenants to have a material impact on our financial condition or liquidity.
Fair Value of Debt    
Based on the borrowing rates currently available to us for long-term debt with similar terms and maturities, the fair value of long-term debt, including current maturities, was approximately $19.8 and $18.2 billion as of September 30, 2023 and December 31, 2022, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of all of our debt instruments.