10. DEBT

Unsecured Senior Notes

In October 2017, the company issued $8.25 billion of unsecured senior notes to finance the Orbital ATK Acquisition and to pay related fees and expenses as follows:


•	$1.0 billion of 2.08 percent Senior Notes due 2020 (the “2020 Notes”),


•	$1.5 billion of 2.55 percent Senior Notes due 2022 (the “2022 Notes”),


•	$1.5 billion of 2.93 percent Senior Notes due 2025 (the “2025 Notes”),


•	$2.0 billion of 3.25 percent Senior Notes due 2028 (the “2028 Notes”) and


•	$2.25 billion of 4.03 percent Senior Notes due 2047 (the “2047 Notes”).

In December 2016, the company issued $750 million of unsecured senior notes due February 1, 2027, with a fixed interest rate of 3.20 percent. We used the net proceeds from this offering for a debt repayment of $200 million in the fourth quarter of 2016 and for general corporate purposes.

Commercial Paper

In May 2018, the company commenced a commercial paper program that serves as a source of short-term financing. In September 2018, the company amended its commercial paper program to increase its capacity to issue unsecured commercial paper notes from $750 million up to $2.0 billion. The commercial paper notes outstanding have original maturities of three months or less from the date of issuance. At December 31, 2018, there were $198 million of outstanding short-term commercial paper borrowings at a weighted-average interest rate of 2.77 percent. The outstanding balance of commercial paper borrowings is recorded in Other current liabilities in the consolidated statements of financial position.

Credit Facilities

In August 2018, the company entered into a new five-year senior unsecured credit facility in an aggregate principal amount of $2.0 billion (the “2018 Credit Agreement”). The 2018 Credit Agreement replaced the company’s prior five-year revolving credit facility in an aggregate amount of $1.6 billion entered into on July 8, 2015. The revolving credit facility established under the 2018 Credit Agreement is intended to support the company’s commercial paper program and other general corporate purposes. At December 31, 2018, there was no balance outstanding under this facility; however, the outstanding balance of commercial paper borrowings reduces the amount available for borrowing under the 2018 Credit Agreement.

In December 2016, a subsidiary of the company entered into a two-year credit facility, with two additional one-year option periods, in an aggregate principal amount of £120 million (the equivalent of approximately $152 million as of December 31, 2018) (the “2016 Credit Agreement”). The company exercised the second option to extend the maturity to December 2020. The 2016 Credit Agreement is guaranteed by the company. At December 31, 2018, there was £85 million (the equivalent of approximately $108 million as of December 31, 2018) outstanding under this facility, which bears interest at a rate of LIBOR plus 1.10 percent. All of the borrowings outstanding under this facility mature less than one year from the date of issuance, but may be renewed under the terms of the facility. Based on our intent and ability to refinance the obligations on a long-term basis, substantially all of the borrowings are classified as non-current.

Our credit agreements contain generally customary terms and conditions, including covenants restricting the company’s ability to sell all or substantially all of its assets, merge or consolidate with another entity or undertake other fundamental changes and incur liens. The company also cannot permit the ratio of its debt to capitalization (as set forth in the credit agreements) to exceed 65 percent. At December 31, 2018, the company was in compliance with all covenants under its credit agreements.

Long-term debt consists of the following:



$ in millions		December 31
$ in millions		2018			2017
Fixed-rate notes and debentures, maturing in	Interest rate
2018	1.75%	$	—		$	850
2019	5.05%	500			500
2020	2.08%	1,000			1,000
2021	3.50%	700			700
2022	2.55%	1,500			1,500
2023	3.25%	1,050			1,050
2025	2.93%	1,500			1,500
2026	7.75% - 7.88%	527			527
2027	3.20%	750			750
2028	3.25%	2,000			2,000
2031	7.75%	466			466
2040	5.05%	300			300
2043	4.75%	950			950
2045	3.85%	600			600
2047	4.03%	2,250			2,250
Credit facilities	1.89%	108			134
Other	Various	272			271
Debt issuance costs		(73		)	(82		)
Total long-term debt		14,400			15,266
Less: current portion⁽¹⁾		517			867
Long-term debt, net of current portion		$	13,883		$	14,399

⁽¹⁾The current portion of long-term debt is recorded in Other current liabilities in the consolidated statements of financial position.

In connection with the Merger, the company assumed $1.7 billion of long-term debt, all of which was repaid as of December 31, 2018.

The estimated fair value of long-term debt was $14.3 billion and $16.0 billion as of December 31, 2018 and 2017, respectively. We calculated the fair value of long-term debt using Level 2 inputs, based on interest rates available for debt with terms and maturities similar to the company’s existing debt arrangements.

Indentures underlying long-term debt issued by the company or its subsidiaries contain various restrictions with respect to the issuer, including one or more restrictions relating to limitations on liens, sale-leaseback arrangements and funded debt of subsidiaries. The majority of these fixed rate notes and debentures are subject to redemption at the company’s discretion at any time prior to maturity in whole or in part at the principal amount plus any make-whole premium and accrued and unpaid interest. Interest on these fixed rate notes and debentures are payable semi-annually in arrears.

Total interest payments, net of interest received, were $456 million, $273 million, and $299 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Maturities of long-term debt as of December 31, 2018, are as follows:



$ in millions
Year Ending December 31
2019	$	517
2020	1,127
2021	741
2022	1,505
2023	1,053
Thereafter	9,532
Total principal payments	14,475
Unamortized premium on long-term debt, net of discount	(2		)
Debt issuance costs	(73		)
Total long-term debt	$	14,400