
9.	DEBT AND CAPITAL LEASE OBLIGATIONS

Debt, at stated values, and capital lease obligations consisted of the following (in millions):



	Final Maturity	December 31,
	Final Maturity	2018			2017
Credit facilities:
Valero Revolver	2020	$	—		$	—
VLP Revolver	2020	—			410
IEnova Revolver	2028	109			—
Canadian Revolver	2019	—			—
Accounts receivable sales facility	2019	100			100
Public debt:
Valero Senior Notes
6.625%	2037	1,500			1,500
3.4%	2026	1,250			1,250
6.125%	2020	850			850
4.35 %	2028	750			—
9.375%	2019	—			750
7.5%	2032	750			750
4.9%	2045	650			650
3.65%	2025	600			600
10.5%	2039	250			250
8.75%	2030	200			200
7.45%	2097	100			100
6.75%	2037	24			24
VLP Senior Notes
4.375%	2026	500			500
4.5%	2028	500			—
Gulf Opportunity Zone Revenue Bonds, Series 2010, 4.0%	2040	300			300
Debenture, 7.65%	2026	100			100
Other debt	Various	50			49
Net unamortized debt issuance costs and other		(80		)	(73		)
Total debt		8,503			8,310
Capital lease obligations		606			562
Total debt and capital lease obligations		9,109			8,872
Less current portion		238			122
Debt and capital lease obligations, less current portion		$	8,871		$	8,750

Credit Facilities

Valero Revolver

We have a $3 billion revolving credit facility (the Valero Revolver) with a group of financial institution lenders that matures in November 2020. The Valero Revolver also provides for the issuance of letters of credit of up to $2.0 billion.

Outstanding borrowings under the Valero Revolver bear interest, at our option, at either (i) the adjusted LIBO rate (as defined in the Valero Revolver) for the applicable interest period in effect from time to time plus the applicable margin or (ii) the alternate base rate (as defined in the Valero Revolver) plus the applicable margin. The Valero Revolver also requires payments for customary fees, including facility fees, letter of credit participation fees, and administrative agent fees. The interest rate and facility fees under the Valero Revolver are subject to adjustment based upon the credit ratings assigned to our senior unsecured debt.

We had no borrowings or repayments under the Valero Revolver during the years ended December 31, 2018, 2017, and 2016.

VLP Revolver

As of December 31, 2018 and 2017, VLP had a $750 million senior unsecured revolving credit facility (the VLP Revolver) with a group of lenders that was scheduled to mature in November 2020. However, on January 10, 2019, in connection with the completion of the Merger Transaction as described in Note 2, the VLP Revolver was terminated.

Outstanding borrowings under the VLP Revolver bore interest, at VLP’s option, at either (i) the adjusted LIBO rate (as defined in the VLP Revolver) for the applicable interest period in effect from time to time plus the applicable margin or (ii) the alternate base rate (as defined in the VLP Revolver) plus the applicable margin. As of December 31, 2017, the variable rate was 2.875 percent. The VLP Revolver required payments for customary fees, including commitment fees, letter of credit participation fees, and administrative agent fees.

During the year ended December 31, 2018, VLP repaid the outstanding balance of $410 million on the VLP Revolver using proceeds from its public offering of $500 million 4.5 percent Senior Notes as described in “Public Debt” below. During the year ended December 31, 2017, VLP borrowed $380 million under the revolver and made no repayments. During the year ended December 31, 2016, VLP borrowed $349 million under the revolver and repaid $494 million.

IEnova Revolver

In February 2018, Central Mexico Terminals (as described in Note 12) entered into a combined $340 million unsecured revolving credit facility (IEnova Revolver) with IEnova (defined in Note 12) that matures in February 2028. IEnova may terminate this revolver at any time and demand repayment of all outstanding amounts; therefore, all outstanding borrowings are reflected in current portion of debt. The IEnova Revolver is available only to the operations of Central Mexico Terminals, and the creditors of Central Mexico Terminals do not have recourse against us.

Outstanding borrowings under this revolver bear interest at the three-month LIBO rate for the applicable interest period in effect from time to time plus the applicable margin. The interest rate under this revolver is subject to adjustment, with agreement by both parties, based upon changes in market conditions. As of December 31, 2018, the variable rate was 6.046 percent.

During the year ended December 31, 2018, Central Mexico Terminals borrowed $109 million and had no repayments under this revolver.

Canadian Revolver

In November 2018, one of our Canadian subsidiaries amended its committed revolving credit facility (the Canadian Revolver) to increase the borrowing capacity from C$75 million to C$150 million under which it may borrow and obtain letters of credit and to extend the maturity date from November 2018 to November 2019.

We had no borrowings or repayments under this revolver during the years ended December 31, 2018, 2017, and 2016.

Accounts Receivable Sales Facility

We have an accounts receivable sales facility with a group of third-party entities and financial institutions to sell up to $1.3 billion of eligible trade receivables on a revolving basis. In July 2018, we amended our agreement to extend the maturity date to July 2019. Under this program, one of our marketing subsidiaries (Valero Marketing) sells eligible receivables, without recourse, to another of our subsidiaries (Valero Capital), whereupon the receivables are no longer owned by Valero Marketing. Valero Capital, in turn, sells an undivided percentage ownership interest in the eligible receivables, without recourse, to the third-party entities and financial institutions. To the extent that Valero Capital retains an ownership interest in the receivables it has purchased from Valero Marketing, such interest is included in our financial statements solely as a result of the consolidation of the financial statements of Valero Capital with those of Valero Energy Corporation; the receivables are not available to satisfy the claims of the creditors of Valero Marketing or Valero Energy Corporation.

As of December 31, 2018 and 2017, $1.8 billion and $2.3 billion, respectively, of our accounts receivable composed the designated pool of accounts receivable included in the program. All amounts outstanding under the accounts receivable sales facility are reflected as debt on our balance sheets and proceeds and repayments are reflected as cash flows from financing activities on the statements of cash flows. As of December 31, 2018 and 2017, the variable interest rate on the accounts receivable sales facility was 3.0618 percent and 2.0387 percent, respectively. During the years ended December 31, 2018, 2017, and 2016, we had no proceeds from or repayments under the accounts receivable sales facility.

Summary of Credit Facilities

We had outstanding borrowings, letters of credit issued, and availability under our credit facilities as follows (amounts in millions and currency in U.S. dollars, except as noted):



				December 31, 2018
	Facility Amount		Maturity Date	Outstanding Borrowings		Letters of Credit Issued		Availability
	Facility Amount		Maturity Date	Outstanding Borrowings		Letters of Credit Issued		Availability
Committed facilities:
Valero Revolver	$	3,000	November 2020	$	—	$	57	$	2,943
Canadian Revolver	C$	150	November 2019	C$	—	C$	5	C$	145
Accounts receivable sales facility	$	1,300	July 2019	$	100	n/a		$	1,200
Letter of credit facility	$	100	November 2019	n/a		$	—	$	100
Committed facilities of VIEs (a):
VLP Revolver (b)	$	750	November 2020	$	—	$	—	$	750
IEnova Revolver	$	340	February 2028	$	109	n/a		$	231
Uncommitted facilities:
Letter of credit facilities	n/a		n/a	n/a		$	229	n/a

^{__________________________}


(a)	Creditors of our VIEs do not have recourse against us.


(b)	The VLP Revolver was terminated on January 10, 2019. See “VLP Revolver” above.

In November 2018, our committed letter of credit facility was amended to extend the maturity date from November 2018 to November 2019.

Letters of credit issued as of December 31, 2018 expire at various times in 2019 through 2020.

We are charged letter of credit issuance fees under our various uncommitted short-term bank credit facilities. These uncommitted credit facilities have no commitment fees or compensating balance requirements.

Public Debt

During the year ended December 31, 2018, the following activity occurred:

•

We issued $750 million of 4.35 percent Senior Notes due June 1, 2028. Proceeds from this debt issuance totaled $749 million before deducting the underwriting discount and other debt issuance costs. The proceeds were used to redeem our 9.375 percent Senior Notes due March 15, 2019 for $787 million, or 104.9 percent of stated value, which includes an early redemption fee of $37 million that is reflected in other income, net.

•

VLP issued $500 million of 4.5 percent Senior Notes due March 15, 2028. Proceeds from this debt issuance totaled $498 million before deducting the underwriting discount and other debt issuance costs. The proceeds were available only to the operations of VLP and were used to repay the outstanding balance of $410 million on the VLP Revolver and $85 million on its notes payable to us, which is eliminated in consolidation. On January 10, 2019, in connection with the completion of the Merger Transaction as described in Note 2, Valero entered into a guarantee agreement to fully and unconditionally guarantee the prompt payment, when due, of any amount owed to the holders of these notes.

During the year ended December 31, 2017, there was no issuance or redemption activity related to our public debt.

During the year ended December 31, 2016, the following activity occurred:


•	We issued $1.25 billion of 3.4 percent Senior Notes due September 15, 2026. Proceeds from this debt issuance totaled $1.246 billion before deducting the underwriting discount and other debt issuance costs.


•	We redeemed our 6.125 percent Senior Notes due June 15, 2017 for $778 million, or 103.70 percent of stated value.


•	We redeemed our 7.2 percent Senior Notes due October 15, 2017 for $213 million, or 106.27 percent of stated value.

•

VLP issued $500 million of 4.375 percent Senior Notes due December 15, 2026. Proceeds from this debt issuance totaled $500 million before deducting the underwriting discount and other debt issuance costs. The proceeds were available only to the operations of VLP and were used to repay $494 million on the VLP Revolver. On January 10, 2019, in connection with the completion of the Merger Transaction as described in Note 2, Valero entered into a guarantee agreement to fully and unconditionally guarantee the prompt payment, when due, of any amount owed to the holders of these notes.

Other Debt

During the year ended December 31, 2018, we retired $137 million of debt assumed in connection with the Peru Acquisition with available cash on hand.

Capital Lease Obligations

We have capital lease obligations that mature at various dates through 2046 for storage tanks, terminal facilities, and other assets that are used in our refining operations. During the years ended December 31, 2018 and 2017, we recognized capital lease assets and related obligations totaling $63 million and $502 million, respectively. These capital lease agreements were primarily for the lease of storage tanks.

Other Disclosures

Interest and debt expense, net of capitalized interest is comprised as follows (in millions):



	Year Ended December 31,
	2018		2017		2016
Interest and debt expense	$	557	$	539	$	511
Less capitalized interest	87		71		65
Interest and debt expense, net of capitalized interest	$	470	$	468	$	446

Our credit facilities and other debt arrangements contain various customary restrictive covenants, including cross-default and cross-acceleration clauses.

Principal maturities for our debt obligations and future minimum rentals on capital lease obligations as of December 31, 2018 were as follows (in millions):



	Debt			Capital Lease Obligations
2019	$	214		$	69
2020	855			65
2021	15			62
2022	5			64
2023	20			65
Thereafter	7,474			957
Net unamortized debt issuance costs and other	(80		)	n/a
Total minimum lease payments	n/a			1,282
Less amount representing interest	n/a			676
Total	$	8,503		$	606