Note 11 Debt

Debt consisted of the following:


	As of December 31,
	2017		2016
	(In thousands)
6.15% senior notes due February 2018 (1)	$	460,762	$	827,539
9.25% senior notes due January 2019		303,489		303,489
5.00% senior notes due September 2020		669,846		669,540
4.625% senior notes due September 2021		695,108		694,868
5.50% senior notes due January 2023		600,000		600,000
5.10% senior notes due September 2023		346,576		346,448
0.75% senior exchangeable notes due January 2024		429,982		—
Term loan facility		—		162,500
Revolving credit facility		510,000		—
Commercial paper		40,000		—
Other		181		297
		4,055,944		3,604,681
Less: current portion		181		297
Less: deferred financing costs		27,997		26,049
	$	4,027,766	$	3,578,335

(1)

The 6.15% senior notes due February 2018 have been classified as long-term because we have the ability and intent to repay this obligation utilizing our revolving credit facility. We used the proceeds from our January 2018 senior notes offering to repay these notes

As of December 31, 2017, the principal amount and maturities of our primary debt for each of the five years after 2017 and thereafter are as follows:


	Paid at Maturity
	(In thousands)
2018	$	460,837	(1)
2019		303,489	(2)
2020		1,220,675	(3)
2021		696,000	(4)
2022		—
Thereafter		1,522,300	(5)
	$	4,203,301

(1)

Represents our 6.15% senior notes due February 2018.

(2)

Represents our 9.25% senior notes due January 2019.

(3)

Represents our 5.0% senior notes due September 2020 and amounts outstanding under our commercial paper program and revolving credit facility due July 2020.

(4)

Represents our 4.625% senior notes due September 2021.

(5)

Represents our 5.50% senior notes due January 2023, 5.10% senior notes due September 2023 and 0.75% senior exchangeable notes due January 2024.

Nabors Delaware’s various fixed rate debt securities comprised of our 6.15%, 9.25%, 5.00%, 4.625, 5.50% and 5.10%, senior unsecured notes are fully and unconditionally guaranteed by us. The notes rank equal in right of payment to all of Nabors Delaware’s existing and future senior unsubordinated debt. The notes rank senior in right of payment to all of our existing and future senior subordinated and subordinated debt. Our guarantee of the notes is unsecured and ranks equal in right of payment to all of our unsecured and unsubordinated indebtedness from time to time outstanding. The notes are subject to redemption by Nabors Delaware, in whole or in part, at any time generally at a redemption price equal to the greater of (i) 100% of the principal amount of the notes then outstanding to be redeemed; or (ii) the sum of the present values of the remaining scheduled payments of principal and interest, determined in the manner set forth in the applicable indenture. In the event of a change in control triggering event, as defined in the indenture, the holders of notes may require Nabors Delaware to purchase all or any part of each note in cash equal to 101% of the principal amount plus accrued and unpaid interest, if any, to the date of purchase, except to the extent Nabors Delaware has exercised its right to redeem the notes.

During 2017, 2016 and 2015, we repurchased $367.9 million, $152.7 million, and $27.5 million aggregate principal amount of our senior unsecured notes for approximately $381.7 million, $157.5 million and $27.5 million, respectively, in cash, reflecting principal, accrued and unpaid interest.

0.75% Senior Exchangeable Notes Due January 2024

In January 2017, Nabors Industries, Inc. issued $575 million in aggregate principal amount of 0.75% exchangeable senior unsecured notes due 2024, which are fully and unconditionally guaranteed by Nabors. The notes bear interest at a rate of 0.75% per year payable semiannually on January 15 and July 15 of each year, beginning on July 15, 2017. The exchangeable notes are bifurcated for accounting purposes into debt and equity components of $411.2 million and $163.8 million, respectively, based on the relative fair value at the issuance date. Debt issuance costs of $9.6 million and equity issuance costs of $3.9 million were capitalized in connection with the issuance of these notes in long-term debt and netted against the proceeds allocated to the equity component, respectively, in our consolidated balance sheet. The debt issuance costs are being amortized through January 2024.

The exchangeable notes are exchangeable, under certain conditions, at an initial exchange rate of 39.75 common shares of Nabors per $1,000 principal amount of exchangeable notes (equivalent to an initial exchange price of approximately $25.16 per common share). Upon any exchange, Nabors Delaware will settle its exchange obligation in cash, common shares of Nabors, or a combination of cash and common shares, at our election.

In connection with the pricing of the notes, we entered into privately negotiated capped call transactions which are expected to reduce potential dilution to common shares and/or offset potential cash payments required to be made in excess of the principal amount upon any exchange of notes. Such reduction and/or offset is subject to a cap representing a price per share of $31.45, an approximately 75.0% premium over our share price of $17.97 as of the date of the transaction. The capped call meets the definition of a derivative under ASC 815, Derivatives and Hedging, as it has an underlying (the Company’s share price), a notional amount (the number of underlying shares to be purchased per option), an initial net investment less (by more than a nominal amount) than the amount that would have to be paid to own the underlying and provides for a default net share settlement (but could also be settled in cash at the election of the Company). However, the capped call meets the derivative scope exception under ASC 815 for instruments indexed to the Company’s own stock and classified in shareholders’ equity and therefore was initially recorded in equity. Until such time as the Company elects a settlement method for the exchangeable notes, the capped call transaction will continue to be accounted for as equity. At conversion, if the Company elects to partially settle the notes in cash in excess of the principal amount, or fully in cash, the capped call will be subject to mark to market through earnings as a derivative until such settlement is paid.

The net proceeds from the offering of the exchangeable notes were used to prepay the remaining balance of our unsecured term loan originally scheduled to mature in 2020, as well as to pay the cost of the capped call transactions. The remaining net proceeds from the offering were allocated for general corporate purposes, including to repurchase or repay other indebtedness.

Commercial Paper Program

In April 2013, Nabors Delaware established a commercial paper program. This program, as amended, currently allows for the issuance from time to time of up to an aggregate amount of $2.25 billion in commercial paper with a maturity of no more than 397 days. Our commercial paper borrowings are classified as long‑term debt because the borrowings are fully supported by availability under our revolving credit facility, which matures as currently structured in July 2020, more than one year from now. The weighted average interest rate on borrowings during the year ended December 31, 2017 was 1.87%. As of December 31, 2017, we had $40.0 million in borrowings outstanding under this program. The commercial paper program can be used for short-term needs that arise and can be repaid with cash flows from operations.

Revolving Credit Facility

In July 2015, we entered into an amendment to our existing committed, unsecured revolving credit facility to increase the borrowing capacity to $2.2 billion, extend the maturity date to July 2020 and increase the size of the accordion option to $500.0 million. We subsequently exercised $50.0 million of the accordion option to bring the total availability to $2.25 billion. The weighted average interest rate on borrowings during the year ended December 31, 2017 was 2.73%. As of December 31, 2017, we had $510.0 million in borrowings outstanding under this facility. The revolving credit facility contains various covenants and restrictive provisions that limit our ability to incur additional indebtedness, make investments or loans and create liens and require us to maintain a net funded indebtedness to total capitalization ratio of no greater than 0.60:1, as defined in the agreement. We were in compliance with all covenants under the agreement at December 31, 2017. If we fail to perform our obligations under the covenants, the revolving credit commitment could be terminated, and any outstanding borrowings under the facility could be declared immediately due and payable.

Term Loan Facility

On September 29, 2015, Nabors Delaware entered into a new five-year unsecured term loan facility for $325.0 million, which was fully and unconditionally guaranteed by us. The term loan facility contained a mandatory prepayment of $162.5 million due in September 2018, which was repaid in December 2016 utilizing a portion of the proceeds received in connection with the 5.50% senior notes offering. In January 2017, we repaid the remaining $162.5 million term loan utilizing the proceeds received in connection with the 0.75% senior exchangeable notes and the facility was terminated.

Short‑Term Borrowings

We had 15 letter‑of‑credit facilities with various banks as of December 31, 2017. Availability and borrowings under our letter-of-credit facilities are as follows:


	December 31,
	2017
	(In thousands)
Credit available	$	759,421
Less: Letters of credit outstanding, inclusive of financial and performance guarantees		153,489
Remaining availability	$	605,932