Note 6 - Debt and Credit Facilities

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Text Block]

Debt Disclosure [Text Block]

Note 6 - Debt and Credit Facilities

The following table provides maturity dates, year-to-date weighted average interest rates and amounts outstanding for our various debt securities and facilities that are included in our unaudited Condensed Consolidated Statements of Financial Position. For additional information on our debt, see Note 8 in our Consolidated Financial Statements and related notes in Item 8 of our 2012 Form 10-K.

	June 30, 2013										June 30, 2012
Dollars in millions	Year(s) due			Weighted average interest rate (1)			Outstanding		Outstanding at December 31, 2012			Weighted average interest rate (1)			Outstanding
Short-term debt
Commercial paper - AGL Capital (2)	2013				0.5	%	$	521	$	1,063			0.5	%	$	731
Commercial paper - Nicor Gas	2013				0.4			-		314			0.5			-
Total short-term debt					0.5			521		1,377			0.5			731
Current portion of long-term debt and capital leases
Current portion of long-term debt	2013				4.5			-		225			4.7			230
Current portion of capital leases	2013				5.0			-		1			4.9			1
Total current portion of long-term debt and capital leases					4.5	%	$	-	$	226			4.7	%	$	231
Long-term debt - excluding current portion
Senior notes	2015	-	2043		5.1	%	$	2,825	$	2,325			5.1	%	$	2,325
First mortgage bonds	2016	-	2038		5.6			500		500			5.6			500
Gas facility revenue bonds	2022	-	2033		0.5			200		200			1.2			200
Medium-term notes	2017	-	2027		7.8			181		181			7.8			181
Total principal long-term debt					4.9			3,706		3,206			5.0			3,206
Fair value adjustment of long-term debt (3)	2016	-	2038	n/a				97		103		n/a				110
Unamortized debt premium, net	n/a			n/a				16		18		n/a				18
Total non-principal long-term debt				n/a				113		121		n/a				128
Total long-term debt							$	3,819	$	3,327					$	3,334
Total debt							$	4,340	$	4,930					$	4,296

(1) Interest rates are calculated based on the daily weighted average balance outstanding for the six months ended June 30.

(2) As of June 30, 2013, the weighted average interest rate on AGL Capital’s commercial paper borrowings was 0.4%.

(3) See Note 3 for additional information on our fair value measurements.

Long-Term Debt

On May 16, 2013, we issued $500 million in 30-year senior notes with a fixed interest rate of 4.4%. The net proceeds were used to repay a portion of AGL Capital’s commercial paper, including $225 million we borrowed to redeem our senior notes that matured on April 15, 2013. We fully and unconditionally guarantee all of our senior notes.

During the first quarter of 2013, we refinanced $200 million of our outstanding tax-exempt gas facility revenue bonds, $180 million of which were previously issued by the New Jersey Economic Development Authority and $20 million of which were previously issued by Brevard County, Florida. The refinancing involved a combination of the issuance of $60 million of refunding bonds to, and the purchase of $140 million of existing bonds by, a syndicate of banks. Our relationship with the syndicate of banks regarding the bonds is governed by an agreement that contains representations, warranties, covenants and default provisions consistent with those contained in similar financing documents of ours. All of the bonds are floating-rate instruments. AGL Resources had no cash receipts or payments in connection with the refinancing. The letters of credit providing credit support for the outstanding revenue bonds along with other related agreements were terminated as a result of the refinancing.

Interest Rate Swaps

On April 4, 2013, we entered into two ten-year, $50 million fixed-rate forward-starting interest rate swaps to hedge any potential interest rate volatility prior to our issuance of senior notes in the second quarter 2013. The average interest rate on these swaps was 1.98%. Including existing forward-starting interest rate swap hedges, which were executed last year, we had fixed-rate swaps totaling $300 million in notional value at an average interest rate of 1.85%. We designated the forward-starting interest rate swaps as cash flow hedges of our second quarter 2013 senior note issuance. The interest rate swaps were settled on May 16, 2013, the senior note issuance date, at which time we received $6 million in proceeds. The $6 million will be amortized to reduce interest expense over the first 10 years of the 30-year senior notes.

Financial and Non-Financial Covenants

The AGL Credit Facility and the Nicor Gas Credit Facility each include a financial covenant that requires us to maintain a ratio of total debt to total capitalization of no more than 70% at the end of any fiscal month; however, our goal is to maintain these ratios at levels between 50% and 60%.These ratios, as calculated in accordance with the debt covenants, include standby letters of credit and surety bonds and exclude accumulated OCI items related to non-cash OCI pension adjustments, other post-retirement benefits liability adjustments and accounting adjustments for cash flow hedges. Adjusting for these items, the following table contains our debt-to-capitalization ratios for the dates presented, which are below the maximum allowed.

	June 30, 2013			December 31, 2012			June 30, 2012
AGL Credit Facility		54	%		58	%		54	%
Nicor Gas Credit Facility		43	%		55	%		43	%

The credit facilities contain certain non-financial covenants that, among other things, restrict liens and encumbrances, loans and investments, acquisitions, dividends and other restricted payments, asset dispositions, mergers and consolidations and other matters customarily restricted in such agreements.

Default Provisions

Our credit facilities and other financial obligations include provisions that, if not complied with, could require early payment or similar actions. The most important default events include:

● a maximum leverage ratio

● insolvency events and nonpayment of scheduled principal or interest payments

● acceleration of other financial obligations

● change of control provisions

We have no triggering events in our debt instruments that are tied to changes in our specified credit ratings or our stock price, and have not entered into any transaction that requires us to issue equity based on credit ratings or other triggering events. We were in compliance with all existing debt provisions and covenants, both financial and non-financial, for all periods presented.