Debt and Credit Agreements

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

Debt and Credit Agreements

13. Debt and Credit Agreements

SHORT-TERM DEBT

As of December 31, 2023 and 2022, total short-term debt was $538 million and $711 million, respectively. As of December 31, 2023, short-term debt consisted mainly of a $297 million U.S. Private Placement and $215 million commercial paper.

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, 2023, excluding commercial paper facilities as described below, amounted to $393 million, of which approximately $26 million was utilized. The weighted average interest rate on total short-term debt outstanding at December 31, 2023 and 2022, excluding the short-term portion of long-term debt, was 6% and 5%, respectively.

LONG-TERM DEBT

As of December 31, 2023 and 2022, total long-term debt was $1,324 million and $1,054 million, respectively.

In March 2023, the Company priced and issued 5-year notes for a total of €500 million in the Eurobond market. The notes carry a coupon of 4.25% and matures in March 2028.

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 facility 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, 2023 the total long-term debt outstanding from the 2014 issuance of $767 million consist of $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 entered a $1,100 million senior unsecured revolving credit facility with 11 banks. The facility matures in May 2028 and has a one-year extension option. The Company pays a commitment fee on the undrawn amount. The commitment fee is 35% of the applicable margin. The applicable margin is related to the Company's credit rating. Given the Company's current rating of BBB from S&P Global Ratings, the applicable margin is 0.425%. As of December 31, 2023, the facility was not utilized.

The Company has a €3,000 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, 2023, €500 million had been issued under this program.

The Company has two commercial paper programs: one SEK 7 billion ($701 million) Swedish program and a $1 billion U.S. program. At December 31, 2023, the total amount outstanding was $215 million.

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, 2023, the Company had placed $290 million in money market funds compared to $237 million as of December 31, 2022.

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)	2024		2025		2026		2027		2028		Thereafter		long- term		Total
Bonds	$	297	$	—	$	285	$	—	$	554	$	185	$	1,024	$	1,321
Loans		—		301		—				—		—		301		301
Commercial papers		215		—		—		—		—		—		—		215
Other short-term debt		26		—		—		—		—		—		—		26
Total principal amount	$	538	$	301	$	285	$	—	$	554	$	185	$	1,324	$	1,862