Debt and Credit Agreements

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Debt and Credit Agreements

13. Debt and Credit Agreements

SHORT-TERM DEBT

As of December 31, 2022 and 2021, total short-term debt was $711 million and $346 million, respectively. As of December 31, 2022, short-term debt consisted mainly of a €500 million ($533 million) 5-year notes in the Eurobond market issued in June 2018. The notes carry a coupon of 0.75% and are due June 2023.

The Company’s subsidiaries have credit agreements, principally in the form of overdraft facilities with several local banks. Total available short-term facilities as of December 31, 2022, excluding commercial paper facilities as described below, amounted to $349 million, of which approximately $27 million was utilized. The weighted average interest rate on total short-term debt outstanding at December 31, 2022 and 2021, excluding the short-term portion of long-term debt, was 5% and 2%, respectively.

LONG-TERM DEBT

As of December 31, 2022 and 2021, total long-term debt was $1,054 million and $1,662 million, respectively.

In June 2020, the Company utilized its SEK 3,000 million facility with Swedish Export Credit Corporation which was signed in May 2020. The SEK 3,000 million ($287 million) loan matures in 2025 and carries a floating interest rate of 3M STIBOR +1.85%.

In 2014, the Company issued long-term debt securities in a U.S. Private Placement. As of December 31, 2022 the total long-term debt outstanding from the 2014 issuance of $767 million consist of: $297 million aggregate principal amount of 10-year senior notes with an interest rate of 4.09%; $285 million aggregate principal amount of 12-year senior notes with an interest rate of 4.24%; and $185 million aggregate principal amount of 15-year senior notes with an interest rate of 4.44%.

CREDIT FACILITIES

In May 2022, the Company refinanced its existing revolving credit facility (RCF) of $1,100 million. The facility, syndicated among 11 banks, matures in May 2027 and has two extension options, each for an additional year. The Company pays a commitment fee on the undrawn amount of 0.15%, representing 35% of the applicable margin, which is 0.425% (given the Company’s rating of “BBB” from S&P Global Ratings). Borrowings under the facility are unsecured. As of December 31, 2022, the facility was not utilized.

The Company has a €3,000 million ($3,199 million) Euro Medium Term Note Program in place for being able to issue notes to be traded on the Global Exchange Market of Euronext Dublin. At December 31, 2022, there were no notes outstanding that had been issued under this program.

The Company has two commercial paper programs: one SEK 7 billion ($671 million) Swedish program and a $1 billion U.S. program. At December 31, 2022 the total amount outstanding was SEK 100 million ($10 million) and $142 million under these two programs.

The Company is not subject to any financial covenants, i.e., performance related restrictions, in any of its significant long-term borrowings or commitments.

CREDIT RISK

In the Company’s financial operations, credit risk arises in connection with cash deposits with banks and when entering into forward exchange agreements, swap contracts or other financial instruments. In order to reduce this risk, deposits and financial instruments are only entered with a limited number of banks up to a calculated risk amount of $200 million per bank for banks rated A- or above and up to $50 million for banks rated BBB+. The policy of the Company is to work with banks that have a strong credit rating and that participate in the Company’s financing. In addition to this, deposits of up to an aggregate amount of $2 billion can be placed in U.S. and Swedish government paper and in certain AAA rated money market funds. As of December 31, 2022, the Company had placed $237 million in money market funds compared to $579 million as of December 31, 2021.

The table below shows debt maturity as cash flow. For a description of hedging instruments used as part of debt management, see the Financial Instruments section of Note 2 and Note 4.

DEBT PROFILE

															Total
PRINCIPAL AMOUNT BY EXPECTED MATURITY (dollars in millions)	2023		2024		2025		2026		2027				Thereafter		long- term		Total
Bonds	$	533	$	297	$	—	$	285	$	—	$	—	$	185	$	767	$	1,300
Loans		—		—		287				—				—		287		287
Commercial papers		152		—		—		—		—				—		—		152
Other short-term debt		27		—		—		—		—				—		—		27
Total principal amount	$	711	$	297	$	287	$	285	$	—			$	185	$	1,054	$	1,765