Debt

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Long-Term Debt

10. DEBT

Commercial Paper

The company maintains a commercial paper program that serves as a source of short-term financing. In December 2022, the company amended its commercial paper program to increase its capacity to issue unsecured commercial paper notes from $2.0 billion to $2.5 billion. There were no commercial paper borrowings outstanding at December 31, 2022 and December 31, 2021, respectively. The outstanding balance of commercial paper borrowings is recorded in Other current liabilities in the consolidated statements of financial position.

Credit Facility

In August 2022, the company entered into a new five-year senior unsecured credit facility in an aggregate principal amount of $2.5 billion (the “2022 Credit Agreement”). The 2022 Credit Agreement replaced the company’s prior five-year, $2.0 billion revolving credit facility entered into on August 17, 2018 and as amended on October 17, 2019. The revolving credit facility established under the 2022 Credit Agreement is intended to support the company’s commercial paper program and other general corporate purposes. Commercial paper borrowings reduce the amount available for borrowing under the 2022 Credit Agreement. At December 31, 2022, there were no borrowings outstanding under this facility.

The 2022 Credit Agreement contains 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 agreement) to exceed 65 percent. At December 31, 2022, the company was in compliance with all covenants under its credit agreement.

Unsecured Senior Notes

Repayments of Senior Notes
In March 2021, the company repaid $700 million of 3.50 percent unsecured notes upon maturity.

In March 2021, the company redeemed $1.5 billion of 2.55 percent unsecured notes due October 2022. The company recorded a pre-tax charge of $54 million principally related to the premium paid on the redemption, which was recorded in Other, net in the unaudited condensed consolidated statements of earnings and comprehensive income.

Debt Exchange
On September 2, 2021, the company completed an exchange offer to eligible holders of the outstanding notes of our direct wholly owned subsidiary, Northrop Grumman Systems Corporation (“NGSC”), maturing through 2036. An aggregate principal amount of $422 million of the NGSC notes was exchanged for $422 million of unregistered Northrop Grumman Corporation notes (the “Unregistered Notes”) with the same interest rates and maturity dates as the NGSC notes exchanged.

On June 15, 2022, the company completed a registered exchange offer pursuant to which the company exchanged an aggregate principal amount of $414 million of the Unregistered Notes for $414 million of new notes registered under the Securities Act of 1933, as amended, (the “Registered Notes”) with the same interest rates and maturity dates as the Unregistered Notes.

Because the debt instruments were not substantially different in either of the exchange offers, both exchanges were treated as debt modifications for accounting purposes with no gain or loss recognized.

Long-term debt consists of the following:

$ in millions		December 31
		2022		2021
Fixed-rate notes and debentures, maturing in	Interest rate
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
2030	4.40%	750		750
2031	7.75%	466		466
2040	5.05% - 5.15%	800		800
2043	4.75%	950		950
2045	3.85%	600		600
2047	4.03%	2,250		2,250
2050	5.25%	1,000		1,000
Other	Various	293		205
Debt issuance costs		(59)		(65)
Total long-term debt		12,877		12,783
Less: current portion(1)		1,072		6
Long-term debt, net of current portion		$	11,805	$	12,777

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

The estimated fair value of long-term debt was $12.1 billion and $15.1 billion as of December 31, 2022 and 2021, 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 $474 million, $570 million and $572 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Maturities of long-term debt as of December 31, 2022, are as follows:

$ in millions
Year Ending December 31
2023	$	1,072
2024	67
2025	1,521
2026	530
2027	753
Thereafter	9,006
Total principal payments	12,949
Unamortized premium on long-term debt, net of discount	(13)
Debt issuance costs	(59)
Total long-term debt	$	12,877