7. DEBT

Debt represents the (a) the Credit Facility, (b) the Senior Notes, (c) the Term Loan, (d) loan obligations of the consolidated CLOs and (e) credit facilities of the Consolidated Funds. The Company has elected to measure the loan obligations of the consolidated CLOs at fair value and reflect the other debt obligations and borrowings of the Company, its subsidiaries and Consolidated Funds at cost.

The following table summarizes the Company’s and its subsidiaries’ debt obligations:


				As of June 30, 2016				As of December 31, 2015
		Original Borrowing		Carrying			Carrying
	Maturity	Amount		Value		Interest Rate	Value		Interest Rate
Credit Facility(1)	4/30/2019		—	$	—	—	$	110,000	2.11%
Senior Notes (2)	10/8/2024	$	250,000		244,377	4.21%		244,077	4.21%
Term Loan(3)	7/29/2026	$	35,250		35,053	2.49%		35,043	2.18%
Total debt obligations				$	279,430		$	389,120

(1)

The Ares Operating Group entities are borrowers under the Credit Facility, which provides a $1.03 billion revolving line of credit with the ability to upsize to $1.28 billion (subject to obtaining commitments for any such additional borrowing capacity). It has a variable interest rate based on either LIBOR or a base rate plus an applicable margin with an unused commitment fee paid quarterly, which is subject to change with our underlying credit agency rating. Currently, base rate loans bear interest calculated based on the base rate plus 0.75% or and the LIBOR rate loans bear interest calculated based on LIBOR plus 1.75%. The unused commitment fee is 0.25% per annum. There is a base rate and LIBOR floor of zero.

(2)

The Senior Notes were issued in October 2014 by Ares Finance Co. LLC (“AFC”), a subsidiary of the Company, at 98.268% of the face amount with interest paid semi-annually. The Company may redeem the Senior Notes prior to maturity, subject to the terms of the indenture.

(3)

In connection with risk retention requirements, the Term Loan was entered into in August 2015 by a subsidiary of the Company that acts as a manager to a CLO. The Term Loan is secured by collateral in the form of CLO senior tranches owned by the Company. To the extent the assets are not sufficient to cover the Term Loan, there is no further recourse to the Company to fund or repay the remaining balance. Interest is paid quarterly, and the Company also pays a fee of 0.025% of a maximum investment amount.

As of June 30, 2016, the Company and its subsidiaries were in compliance with all covenants under the Credit Facility, Senior Notes and Term Loan obligations.

The Company typically incurs and pays debt issuance costs when entering into a new debt obligation. Debt issuance costs may be recorded as a reduction of the corresponding debt obligation and are amortized over the term of the obligation. In connection with amending the terms of the Credit Facility, new debt issuance costs of approximately $0.6 were incurred during the six months ended June 30, 2016. The unamortized portion of the Credit Facility’s debt issuance costs of $5.8 million and $6.2 million as of June 30, 2016 and December 31, 2015, respectively, is included in other assets in the Condensed Consolidated Statements of Financial Condition. The unamortized portion of the Senior Notes and Term Loan debt issuance costs of $2.1 million and $2.2 million as of June 30, 2016 and December 31, 2015, respectively, is included in the net carrying value of the Company’s debt obligations in the Condensed Consolidated Statements of Financial Condition. Amortization of debt issuance costs was $0.6 million and $0.3 million for the three months ended June 30, 2016 and 2015, respectively, and $1.1 million and $0.7 million for the six months ended June 30, 2016 and 2015, and is included in net interest and investment income in the Condensed Consolidated Statements of Operations.

Loan Obligations of the Consolidated CLOs

Loan obligations of the Consolidated Funds that are CLOs ("Consolidated CLOs") represent amounts due to holders of debt securities issued by the Consolidated CLOs. Several of the Consolidated CLOs issued preferred shares representing the subordinated interests that are mandatorily redeemable upon the maturity dates of the senior secured loan obligations. As a result, these shares have been classified as liabilities and are included in CLO loan obligations in the Condensed Consolidated Statements of Financial Condition.

As of June 30, 2016 and December 31, 2015, the following loan obligations were outstanding and classified as liabilities of the Company’s consolidated CLOs:


	As of June 30, 2016						As of December 31, 2015
					Weighted Average					Weighted Average
	Loan		Fair Value of		Remaining		Loan		Fair Value of	Remaining
	Obligations		Loan Obligations		Maturity In Years		Obligations		Loan Obligations	Maturity In Years
Senior secured notes(1)	$	2,068,119	$	2,040,235	9.05	$	2,101,506	$	2,054,123	9.55
Subordinated notes / preferred shares(2)		197,059		128,111	9.04		194,443		120,229	9.53
Total loan obligations of Consolidated CLOs	$	2,265,178	$	2,168,346		$	2,295,949	$	2,174,352

(1)

Original borrowings under the senior secured notes totaled $2.2 billion, with various maturity dates ranging from October 2024 to December 2025. The weighted average interest rate as of June 30, 2016 was 3.55%.

(2)

Original borrowings under the subordinated notes totaled $197.1 million, with various maturity dates ranging from October 2024 to December 2025. They do not have contractual interest rates, but instead receive distributions from the excess cash flows generated by each Consolidated CLO.

Loan obligations of the Consolidated CLOs are collateralized by the assets held by the Consolidated CLOs, consisting of cash and cash equivalents, corporate loans, corporate bonds and other securities. The assets of one Consolidated CLO may not be used to satisfy the liabilities of another Consolidated CLO. Loan obligations of the Consolidated CLOs include floating rate notes, deferrable floating rate notes, revolving lines of credit and subordinated notes. Amounts borrowed under the notes are repaid based on available cash flows subject to priority of payments under each Consolidated CLO’s governing documents.

Credit Facilities of the Consolidated Funds

Certain Consolidated Funds maintain credit facilities to fund investments between capital drawdowns. These facilities generally are collateralized by the unfunded capital commitments of the Consolidated Funds’ limited partners, bear an annual commitment fee based on unfunded commitments and contain various affirmative and negative covenants and reporting obligations, including restrictions on additional indebtedness, liens, margin stock, affiliate transactions, dividends and distributions, release of capital commitments and portfolio asset dispositions. The creditors of these facilities have no recourse to the Company. As of June 30, 2016 and December 31, 2015, the Consolidated Funds were in compliance with all financial and non‑financial covenants under such credit facilities.

The Consolidated Funds had the following revolving bank credit facilities outstanding as of June 30, 2016 and December 31, 2015:


				As of June 30, 2016			As of December 31, 2015
	Maturity	Total		Outstanding			Outstanding
Type of Facility	Date	Capacity		Loan(1)		Effective Rate	Loan(1)		Effective Rate
Consolidated Funds credit facility	01/01/23	$	18,000	$	12,484	2.19%	$	11,734	2.00%
Total borrowings of Consolidated Funds				$	12,484		$	11,734

(1)

The fair values of the borrowings approximate the carrying value, as the interest rate on the borrowings is a floating rate.