Note 8 - Debt and Credit Facilities

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Note 8 - Debt and Credit Facilities

Our financing activities, including long-term and short-term debt, are subject to customary approval or review by state and federal regulatory bodies. Our wholly owned subsidiary, AGL Capital, was established to provide for our ongoing financing needs through a commercial paper program, the issuance of various debt and hybrid securities and other financing arrangements. We fully and unconditionally guarantee all debt issued by AGL Capital. Nicor Gas is not permitted by regulation to make loans to affiliates or utilize AGL Capital for its financing needs. 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 Consolidated Statements of Financial Position.

		December 31, 2014					December 31, 2013
Dollars in millions	Year(s) due	Weighted average interest rate (1)			Outstanding		Weighted average interest rate (1)			Outstanding
Short-term debt
Commercial paper - AGL Capital (2)	2015		0.3	%	$	590		0.4	%	$	857
Commercial paper - Nicor Gas (2)	2015		0.2			585		0.3			314
Total short-term debt			0.3	%	$	1,175		0.4	%	$	1,171
Current portion of long-term debt	2015		5.0	%	$	200		-	%	$	-
Long-term debt - excluding current portion
Senior notes	2016-2043		5.0	%	$	2,625		5.0	%	$	2,825
First mortgage bonds	2016-2038		5.6			500		5.6			500
Gas facility revenue bonds	2022-2033		0.9			200		1.0			200
Medium-term notes	2017-2027		7.8			181		7.8			181
Total principal long-term debt			4.9	%	$	3,506		4.9	%	$	3,706
Fair value adjustment of long-term debt (3)	2016-2038	n/a				80	n/a				91
Unamortized debt premium, net	n/a	n/a				16	n/a				16
Total non-principal long-term debt		n/a				96	n/a				107
Total long-term debt					$	3,602				$	3,813
Total debt					$	4,977				$	4,984

(1) Interest rates are calculated based on the daily weighted average balance outstanding for the 12 months ended December 31, 2014 and 2013.

(2) As of December 31, 2014, the effective interest rates on our commercial paper borrowings were 0.5% for AGL Capital and 0.4% for Nicor Gas.

(3) See Note 4 for additional information on our fair value measurements.

Short-term Debt

Our short-term debt at December 31, 2014 and 2013 was comprised of borrowings under our commercial paper programs.

Commercial Paper Programs We maintain commercial paper programs at AGL Capital and at Nicor Gas that consist of short-term, unsecured promissory notes used in conjunction with cash from operations to fund our seasonal working capital requirements. Working capital needs fluctuate during the year and are highest during the injection period in advance of the Heating Season. The Nicor Gas commercial paper program supports working capital needs at Nicor Gas, while all of our other subsidiaries and SouthStar participate in the AGL Capital commercial paper program. During 2014, our commercial paper maturities ranged from 1 to 108 days, and at December 31, 2014, remaining terms to maturity ranged from 2 to 70 days. During 2014, total borrowings and repayments netted to a borrowing of $4 million. For commercial paper issuances with original maturities over three months, borrowings and repayments were $50 million and $195 million, respectively. During 2014, we utilized a portion of the approximately $225 million in proceeds and distributions from the sale of Tropical Shipping to reduce our commercial paper borrowings.

Credit FacilitiesAt December 31, 2014 and 2013, there were no outstanding borrowings under either the AGL Capital or Nicor Gas credit facilities. In 2013, the AGL Credit Facility and Nicor Gas Credit Facility maturity dates were extended to November 10, 2017 and December 15, 2017, respectively. The terms, conditions and pricing under the agreements remain unchanged.

Current Portion of Long-term DebtThe current portion of our long-term debt at December 31, 2014 is composed of the portion of our long-term debt due within the next 12 months.

Long-term Debt

Our long-term debt at December 31, 2014 and 2013 consisted of medium-term notes: Series A, Series B, and Series C, which we issued under an indenture dated December 1, 1989; senior notes; first mortgage bonds; and gas facility revenue bonds. Some of these issuances were completed in the private placement market. In determining that those specific bonds qualify for exemption from registration under Section 4(2) of the Securities Act of 1933, we relied on the facts that the bonds were offered only to a limited number of large institutional investors and each institutional investor that purchased the bonds represented that it was purchasing the bonds for its own account and not with a view to distribute them. We fully and unconditionally guarantee all of our senior notes and gas facility revenue bonds. Additionally, substantially all of Nicor Gas’ properties are subject to the lien of the indenture securing its first mortgage bonds.

The majority of our long-term debt matures after fiscal year 2019. The annual maturities of our long-term debt for the next five years and thereafter are as follows:

Year	Amount (in millions)
2015	$	200
2016		545
2017		22
2018		155
2019		350
Thereafter		2,434
Total	$	3,706

Senior Notes There were no senior note issuances in 2014; however, during the fourth quarter of 2014, $120 million of senior notes that were issued to help fund the Nicor merger converted from a 1.9% fixed rate to a LIBOR-based floating rate. In 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.

On January 23, 2015, we executed $800 million in notional value of 10 year and 30 year fixed-rate forward-starting interest rate swaps to hedge potential interest rate volatility prior to anticipated issuances of senior notes during 2015 and 2016. These debt issuances will be used to reduce our commercial paper for the amount that was borrowed to repay our senior notes that matured in January 2015 and to fund upcoming debt maturities as well as capital expenditures associated with increased utility investment and construction of our new pipeline projects. We have designated the forward-starting interest rate swaps, which will be settled on the debt issuance dates, as cash flow hedges.

First Mortgage Bonds We acquired the first mortgage bonds of Nicor Gas, which were issued through the public and private placement markets, as a result of the 2011 merger.

Gas Facility Revenue Bonds We are party to a series of loan agreements with the New Jersey Economic Development Authority and Brevard County, Florida under which a series of gas facility revenue bonds has been issued. These revenue bonds are issued by state agencies or counties to investors, and proceeds from the issuance are then loaned to us.

During 2013, we refinanced $200 million of our outstanding tax-exempt gas facility revenue bonds, which 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. We 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.

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 pension adjustments, welfare benefits liability adjustments and accounting adjustments for cash flow hedges. Adjusting for these items, the following table contains our debt-to-capitalization ratios as of December 31, which are below the maximum allowed.

	AGL Resources						Nicor Gas
	2014			2013			2014			2013
Debt-to-capitalization ratio		55	%		57	%		62	%		55	%

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 the following:

● a maximum leverage ratio

● insolvency events and/or 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, as of December 31, 2014 and 2013.