Debt and Borrowing Arrangements

3 Months Ended

Mar. 31, 2020

Note 8. Debt and Borrowing Arrangements

Short-Term Borrowings:

Our short-term borrowings and related weighted-average interest rates consisted of:



	As of March 31, 2020				As of December 31, 2019
	Amount Outstanding		Weighted- Average Rate		Amount Outstanding		Weighted- Average Rate
	(in millions, except percentages)
Commercial paper	$	3,695	2.0	%	$	2,581	2.0	%
Credit facility borrowings	1,000		1.7	%	—		—
Bank loans	69		5.2	%	57		5.2	%
Total short-term borrowings	$	4,764			$	2,638

As of March 31, 2020, commercial paper issued and outstanding had between 1 and 80 days remaining to maturity. Commercial paper borrowings since year end increased to finance the payment of long-term debt maturities, share repurchases and dividend payments.

Some of our international subsidiaries maintain primarily uncommitted credit lines to meet short-term working capital needs. Collectively, these credit lines amounted to $1.4 billion at March 31, 2020 and $1.7 billion at December 31, 2019. Borrowings on these lines were $69 million at March 31, 2020 and $57 million at December 31, 2019.

On March 24, 2020, we entered into a $1.75 billion revolving credit agreement for a 364-day senior unsecured credit facility that expires on March 23, 2021. On April 1, 2020, we increased the credit facility from $1.75 billion to $1.95 billion. The agreement includes terms and conditions similar to our existing $4.5 billion multi-year credit facility discussed below with the exception of a requirement that, once the mandatory repayment obligations of the $2.5 billion revolving credit facility described below are satisfied, any proceeds from additional long-term debt issuances of up to $1.95 billion must be used to repay outstanding borrowings under the credit facility and reduce the remaining capacity. As of March 31, 2020, no amounts were drawn on the facility.

On March 6, 2020, we entered into a $2.5 billion revolving credit agreement for a 364-day unsecured credit facility that expires on March 5, 2021. The agreement includes terms and conditions similar to our existing $4.5 billion multi-year credit facility discussed below with the exception of a requirement that any proceeds from long-term debt issuances of up to $2.5 billion in aggregate must be used to repay outstanding borrowings under the credit facility and reduce the remaining capacity. On March 12, 2020, we borrowed $1.0 billion as a strategic decision to increase cash on hand in light of the uncertainty in the global markets resulting from the COVID-19 outbreak. During April 2020, we drew an additional $1.25 billion on the facility primarily to fund the acquisition of Give & Go. Subsequently, we repaid $1.25 billion of the facility and reduced the size of the credit facility to $1.5 billion resulting in a remaining draw capacity of $0.5 billion.

On February 26, 2020, we entered into a $1.5 billion revolving credit agreement for a 364-day senior unsecured credit facility that expires on February 24, 2021. The agreement replaces our previous credit agreement that was scheduled to expire on February 26, 2020 and includes the same terms and conditions as our existing $4.5 billion multi-year credit facility discussed below. As of March 31, 2020, no amounts were drawn on the facility.

We also maintain a $4.5 billion multi-year senior unsecured revolving credit facility for general corporate purposes, including working capital needs, and to support our commercial paper program. The credit facility is scheduled to expire on February 27, 2024. The revolving credit agreement includes a covenant that we maintain a minimum shareholders' equity of at least $24.6 billion, excluding accumulated other comprehensive earnings/(losses), the cumulative effects of any changes in accounting principles and earnings/(losses) recognized in connection with the ongoing application of any mark-to-market accounting for pensions and other retirement plans. At March 31, 2020, we complied with this covenant as our shareholders' equity, as defined by the covenant, was $37.3 billion. The revolving credit facility also contains customary representations, covenants and events of default. There are no credit rating triggers, provisions or other financial covenants that could require us to post collateral as security. As of March 31, 2020, no amounts were drawn on the facility.

Long-Term Debt:

On April 13, 2020, we issued $1.0 billion of U.S. dollar denominated notes, consisting of $500 million 2.125% notes that mature on April 13, 2023 and $500 million 2.750% notes that mature on April 13, 2030. We received proceeds of $991.3 million, net of discounts and associated financing costs. The proceeds were used to repay amounts outstanding under our revolving credit agreement. We recorded approximately $8.7 million of deferred financing costs and discounts that will be amortized evenly into interest expense over the life of the notes.

On March 30, 2020, fr225 million (or $235 million) of our 0.05% Swiss franc notes matured. The notes and accrued interest to date were paid from the amounts drawn on our 364-day revolving credit facility, commercial paper and cash on hand.

On February 10, 2020, $427 million of our 5.375% U.S. dollar notes matured. The bonds and accrued interest to date were paid with the issuance of commercial paper and cash on hand.

Fair Value of Our Debt:

The fair value of our short-term borrowings at March 31, 2020 and December 31, 2019 reflects current market interest rates and approximates the amounts we have recorded on our condensed consolidated balance sheets. The fair value of our long-term debt was determined using quoted prices in active markets (Level 1 valuation data) for the publicly traded debt obligations. At March 31, 2020, the aggregate fair value of our total debt was $20,410 million and its carrying value was $19,790 million. At December 31, 2019, the aggregate fair value of our total debt was $19,388 million and its carrying value was $18,426 million.

Interest and Other Expense, net:

Interest and other expense, net consisted of:



	For the Three Months Ended March 31,
	2020			2019
	(in millions)
Interest expense, debt	$	110		$	123
Loss related to interest rate swaps	103			—
Other (income)/expense, net	(23		)	(43		)
Interest and other expense, net	$	190		$	80

Other income includes amounts excluded from hedge effectiveness related to our net investment hedge derivative contracts and totaled $33 million for the three months ended March 31, 2020 and $33 million for the three months ended March 31, 2019.