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 or ranges, year-to-date weighted average interest rates and amounts outstanding for our various debt securities and facilities that are included on our Consolidated Balance Sheets.



		December 31, 2015					December 31, 2014
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⁾	2016	0.5	%	$	471		0.3	%	$	590
Commercial paper - Nicor Gas ⁽²⁾	2016	0.4		539			0.2		585
Total short-term debt		0.4	%	$	1,010		0.3	%	$	1,175
Current portion of long-term debt	2016	4.9	%	$	545		5.0	%	$	200
Long-term debt - excluding current portion
Senior notes	2018-2043	5.0	%	$	2,455		5.0	%	$	2,625
First mortgage bonds	2019-2038	5.9		375			5.6		500
Gas facility revenue bonds	2022-2033	0.9		200			0.9		200
Medium-term notes	2017-2027	7.8		181			7.8		181
Total principal long-term debt		4.9	%	$	3,211		4.9	%	$	3,506
Unamortized fair value adjustment of long-term debt ⁽³⁾	2016-2038	n/a		68			n/a		80
Unamortized debt premium, net	n/a	n/a		16			n/a		16
Unamortized debt issuance costs	n/a	n/a		(20		)	n/a		(21		)
Total non-principal long-term debt		n/a		64			n/a		75
Total long-term debt - excluding current portion				$	3,275				$	3,581
Total debt				$	4,830				$	4,956


(1)	Interest rates are calculated based on the daily weighted average balance outstanding for the years ended December 31, 2015 and 2014.


(2)	As of December 31, 2015, the effective interest rates on our commercial paper borrowings were 0.7% for AGL Capital and 0.5% for Nicor Gas.


(3)	See Note 5 herein for additional information on our fair value measurements.

Short-term Debt

Our short-term debt at December 31, 2015 and 2014 was composed 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. Nicor Gas' commercial paper program supports working capital needs at Nicor Gas, while all of our other subsidiaries and SouthStar participate in AGL Capital's commercial paper program. During 2015, our commercial paper maturities ranged from 1 to 63 days and at December 31, 2015, remaining terms to maturity ranged from 4 to 43 days. During 2015, total borrowings and repayments netted to a payment of $165 million. During 2015 there were no commercial paper issuances with original maturities over three months.

Credit Facilities On October 30, 2015, we entered into agreements to amend and extend the AGL Credit Facility and Nicor Gas Credit Facility. Under the terms of these agreements, we extended the maturity dates of the AGL Credit Facility and the Nicor Gas Credit Facility to November 9, 2018 and December 14, 2018, respectively. One of the banks elected not to participate in this extension and its total commitment of $75 million will continue through the fourth quarter of 2017. We also modified the credit facilities to provide for the limited consent by the lenders to the proposed merger with Southern Company. Additionally, we made similar changes to our Bank Rate Mode Covenants Agreement. At December 31, 2015 and 2014, there were no outstanding borrowings under either the AGL Capital or Nicor Gas credit facility.

Current Portion of Long-term Debt The current portion of our long-term debt at December 31, 2015 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, 2015 and 2014 consisted of medium-term notes: Series A, Series B, and Series C; senior notes; first mortgage bonds; and gas facility revenue bonds. 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 2020. The annual maturities of our long-term debt for the next five years and thereafter are as follows:



Year	Amount (in millions)
2016	$	545
2017	22
2018	155
2019	350
2020	—
Thereafter	2,684
Total	$	3,756

Senior Notes On November 18, 2015 AGL Capital issued $250 million in 10-year senior notes at a fixed interest rate of 3.875%. The net proceeds from the senior notes, which are guaranteed by AGL Capital, were used to repay a portion of AGL Capital’s commercial paper, including $200 million we borrowed to repay our senior notes that matured on January 15, 2015. The balance of the net proceeds will be used for general corporate purposes, including capital expenditures associated with increased utility investment and construction of our new pipeline projects.

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 our senior note issuance in the fourth quarter of 2015 and our anticipated issuances in 2016. We have designated the forward-starting interest rate swaps, which are settled on the respective debt issuance dates, as cash flow hedges. We settled $200 million of these interest rate swaps on November 18, 2015, in conjunction with the aforementioned senior note issuance, at which time we received $248 million in net proceeds that are classified as a financing activity on the Consolidated Statements of Cash Flow. The $2 million of debt issuance costs will be amortized to reduce interest expense over the remaining term of the senior notes. We performed a qualitative assessment of effectiveness as of December 31, 2015 and concluded that the remaining hedges are highly effective.

First Mortgage Bonds We assumed the first mortgage bonds of Nicor Gas as a result of the 2011 merger with Nicor.

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 five series of gas facility revenue bonds have been issued. These revenue bonds are issued by state agencies or counties to investors, and proceeds from the issuance then are loaned to us.

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 month. The following table contains our debt-to-capitalization ratios as of December 31, which are below the maximum allowed.



	AGL Resources				Nicor Gas
	2015		2014		2015		2014
Debt covenants ⁽¹⁾	54	%	55	%	56	%	62	%


(1)	As defined in our credit facilities, includes standby letters of credit and performance/surety bonds and excludes accumulated OCI items related to non-cash pension adjustments, welfare benefits liability adjustments and accounting for cash flow hedges.

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; and


•	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, 2015 and 2014.