Long-Term Debt

9 Months Ended

Sep. 30, 2022

5. LONG-TERM DEBT

Our long-term debt includes fixed rate secured and variable rate unsecured debt. Our secured debt is secured equally and ratably by a first priority lien on certain transmission and distribution assets. See “Deed of Trust” below for additional information. At September 30, 2022 and December 31, 2021, our long-term debt consisted of the following:


	At September 30,		At December 31,
	2022		2021
Fixed Rate Secured:
4.10% Senior Notes due June 1, 2022	$	-	$	400
7.00% Debentures due September 1, 2022		-		482
2.75% Senior Notes due June 1, 2024		500		500
2.95% Senior Notes due April 1, 2025		350		350
0.55% Senior Notes due October 1, 2025		450		450
3.86% Senior Notes Series A, due December 3, 2025		174		174
3.86% Senior Notes Series B, due January 14, 2026		38		38
3.70% Senior Notes due November 15, 2028		650		650
5.75% Senior Notes due March 15, 2029		318		318
2.75% Senior Notes due May 15, 2030		700		700
7.00% Senior Notes due May 1, 2032		494		494
4.15% Senior Notes due June 1, 2032		400		-
4.55% Senior Notes due September 15, 2032		700		-
7.25% Senior Notes due January 15, 2033		323		323
7.50% Senior Notes due September 1, 2038		300		300
5.25% Senior Notes due September 30, 2040		475		475
4.55% Senior Notes due December 1, 2041		400		400
5.30% Senior Notes due June 1, 2042		348		348
3.75% Senior Notes due April 1, 2045		550		550
3.80% Senior Notes due September 30, 2047		325		325
4.10% Senior Notes due November 15, 2048		450		450
3.80% Senior Notes due June 1, 2049		500		500
3.10% Senior Notes due September 15, 2049		700		700
3.70% Senior Notes due May 15, 2050		400		400
2.70% Senior Notes due November 15, 2051		500		500
4.60% Senior Notes due June 1, 2052		400		-
4.95% Senior Notes due September 15, 2052		500		-
5.35% Senior Notes due October 1, 2052		300		300
Fixed rate secured long-term debt		11,245		10,127
Variable Rate Unsecured:
Term loan credit agreement maturing August 30, 2023		100		-
Variable rate unsecured long-term debt		100		-
Total long-term debt		11,345		10,127
Unamortized discount, premium and debt issuance costs		(119)		(95)
Less amount due currently		(100)		(882)
Long-term debt, less amounts due currently	$	11,126	$	9,150

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Long-Term Debt-Related Activity in the Nine Months Ended September 30, 2022

January 2022 Term Loan Credit Agreement

On January 28, 2022, we entered into an unsecured term loan credit agreement with a commitment equal to an aggregate principal amount of $1.30 billion (January 2022 Term Loan Credit Agreement). The January 2022 Term Loan Credit Agreement had a maturity date of April 29, 2023. We borrowed $400 million on January 28, 2022, $600 million on February 28, 2022 (February 2022 borrowing), $185 million on March 28, 2022, and $115 million on April 28, 2022 under the January 2022 Term Loan Credit Agreement. The proceeds from each borrowing were used for general corporate purposes, including to repay outstanding CP Notes and, in the case of the February 2022 borrowing, to redeem in full the $400 million aggregate principal amount outstanding of our 4.10% senior secured notes due June 1, 2022 (2022 Notes), plus accrued and unpaid interest on the 2022 Notes. On each of May 20, 2022 and September 9, 2022, we repaid $650 million of the aggregate principal amount outstanding under the January 2022 Term Loan Credit Agreement. Following the repayment on September 9, 2022, no borrowings remained outstanding and the January 2022 Term Loan Credit Agreement was no longer in effect.

July 2022 Term Loan Credit Agreement

On July 6, 2022, we entered into an unsecured term loan credit agreement with a commitment equal to an aggregate principal amount of $650 million (July 2022 Term Loan Credit Agreement). The July 2022 Term Loan Credit Agreement matures on August 30, 2023. On August 29, 2022, we borrowed the entire $650 million aggregate principal amount available under the July 2022 Term Loan Credit Agreement and no additional amounts remain available for borrowing under the July 2022 Term Loan Credit Agreement. The proceeds from the borrowing under the July 2022 Term Loan Credit Agreement were used for general corporate purposes, including to repay in full the $482 million principal amount outstanding of our 7.00% Debentures due 2022 (the Debentures), plus accrued and unpaid interest on the Debentures. On September 9, 2022, we repaid $550 million of the aggregate principal amount outstanding under the July 2022 Term Loan Credit Agreement. As a result of the repayment, the aggregate principal amount outstanding under the July 2022 Term Loan Credit Agreement at September 30, 2022 was $100 million.

Loans under the July 2022 Term Loan Credit Agreement bear interest, at our option, at either (i) an adjusted term SOFR (calculated based on one-month term SOFR as of a specified date, plus an adjustment of 0.10% (SOFR Adjustment)) plus a spread of 0.60%, (ii) an adjusted daily simple SOFR (calculated based on daily simple SOFR as of a specified date, plus the SOFR Adjustment) plus a spread of 0.60%, or (iii) for any day, at a rate equal to the greatest of: (1) the prime rate publicly announced by the administrative agent on such date, (2) the federal funds effective rate on such date plus 0.50%, and (3) daily simple SOFR on such date, plus 1.0%.

Secured Debt Repayments

On March 1, 2022, we redeemed in full the $400 million aggregate principal amount outstanding of our 2022 Notes, which were to mature on June 1, 2022. The redemption price was equal to 100% of the principal amount of the 2022 Notes, plus accrued interest to, but not including, the redemption date of March 1, 2022. Following the redemption of the 2022 Notes, none of the 2022 Notes remain outstanding.

On September 1, 2022, we repaid in full at maturity the $482 million aggregate principal amount outstanding of the Debentures, plus accrued and unpaid interest on the Debentures. Following the repayment of the Debentures, none of the Debentures remain outstanding.

4.15% 2032 Notes and 4.60% 2052 Notes Issuances

On May 20, 2022, we issued $400 million aggregate principal amount of 4.15% senior secured notes due June 1, 2032 (4.15% 2032 Notes) and $400 million aggregate principal amount of 4.60% senior secured notes due June 1, 2052 (4.60% 2052 Notes).

We intend to allocate/disburse the proceeds from the sale of the 4.15% 2032 Notes (net of the discounts and fees to the initial purchasers and the estimated pro rata expenses related to the offering of the 4.15% 2032 Notes) of

approximately $395 million, or an amount equal to the net proceeds from the sale of the 4.15% 2032 Notes, to finance and/or refinance, in whole or in part, investments in or expenditures on one or more new and/or existing eligible green projects in accordance with our sustainable financing framework. Eligible green projects include transmission and distribution projects connecting renewable energy sources to the ERCOT grid, customer energy efficiency programs, and deployment of automated metering infrastructure and smart grid technology. Prior to the allocation/disbursement of the full amount of the net proceeds from the sale of the 4.15% 2032 Notes, we temporarily applied the entire amount of such net proceeds to repay a portion of the principal amount outstanding under the January 2022 Term Loan Credit Agreement. We used the proceeds from the sale of the 4.60% 2052 Notes (net of the discounts and fees to the initial purchasers and the estimated pro rata expenses related to the offering of the 4.60% 2052 Notes) of approximately $392 million for general corporate purposes, including to repay $255 million of the principal amount outstanding under the January 2022 Term Loan Credit Agreement.

The 4.15% 2032 Notes and 4.60% 2052 Notes were issued pursuant to the provisions of an Indenture, dated as of August 1, 2002, between Oncor and The Bank of New York Mellon Trust Company, N.A. (as successor to The Bank of New York Mellon, formerly The Bank of New York), as trustee, as amended and supplemented.

The 4.15% 2032 Notes bear interest at a rate of 4.15% per annum and mature on June 1, 2032. The 4.60% 2052 Notes bear interest at a rate of 4.60% per annum and mature on June 1, 2052. Interest on the 4.15% 2032 Notes and the 4.60% 2052 Notes is payable in cash semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2022. Prior to March 1, 2032, in the case of the 4.15% 2032 Notes and December 1, 2051 in the case of the 4.60% 2052 Notes, we may redeem such notes at any time, in whole or in part, at a price equal to 100% of their principal amount, plus accrued and unpaid interest and a “make-whole” premium. On and after March 1, 2032 in the case of the 4.15% 2032 Notes and December 1, 2051 in the case of the 4.60% 2052 Notes, we may redeem such notes at any time, in whole or in part, at a redemption price equal to 100% of the principal amount of such notes, plus accrued and unpaid interest.

The 4.15% 2032 Notes and 4.60% 2052 Notes were issued in a private placement and were not registered under the Securities Act. In connection with the completion of the sale of the 4.15% 2032 Notes and 4.60% 2052 Notes, we entered into a registration rights agreement with the representatives of the initial purchasers of such notes (the May Registration Rights Agreement). Under the May Registration Rights Agreement, we agreed, subject to certain exceptions, to file a registration statement with the SEC with respect to a registered offer to exchange the 4.15% 2032 Notes and the 4.60% 2052 Notes for publicly registered notes (the May Exchange Offer Registration Statement), or under certain circumstances, a shelf registration statement (the May Shelf Registration Statement). We have agreed to use commercially reasonable efforts to cause the May Exchange Offer Registration Statement to be declared effective under the Securities Act on or prior to June 1, 2023 and to consummate the exchange offer on or prior to July 15, 2023. Oncor agreed to use commercially reasonable efforts to cause any May Shelf Registration Statement to become or be declared effective within the later of 180 days after such May Shelf Registration Statement filing obligation arises and June 1, 2023. If we do not comply with certain of our obligations under the May Registration Rights Agreement, the affected notes will bear additional interest on the principal amount of such affected notes at a rate of 0.50% per annum over the interest rate otherwise provided for under such notes for the period during which the registration default continues, but not later than the second anniversary of the issue date of such notes.

4.55% 2032 Notes and 4.95% 2052 Notes Issuances

On September 8, 2022, we issued $700 million aggregate principal amount of 4.55% senior secured notes due September 15, 2032 (4.55% 2032 Notes) and $500 million aggregate principal amount of 4.95% senior secured notes due September 15, 2052 (4.95% 2052 Notes).

We used the proceeds from the sale of the 4.55% 2032 Notes and the 4.95% 2052 Notes (net of the discounts, fees and expenses) of approximately $1.185 billion for general corporate purposes, including to repay $650 million of the aggregate principal amount outstanding under the January 2022 Term Loan Credit Agreement and a portion of the aggregate principal amount outstanding under the July 2022 Term Loan Credit Agreement.

The 4.55% 2032 Notes and 4.95% 2052 Notes were issued pursuant to the provisions of an Indenture, dated as of August 1, 2002, between Oncor and The Bank of New York Mellon Trust Company, N.A. (as successor to The Bank of New York Mellon, formerly The Bank of New York), as trustee, as amended and supplemented.

The 4.55% 2032 Notes bear interest at a rate of 4.55% per annum and mature on September 15, 2032. The 4.95% 2052 Notes bear interest at a rate of 4.95% per annum and mature on September 15, 2052. Interest on the 4.55% 2032 Notes and the 4.95% 2052 Notes is payable in cash semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2023. Prior to June 15, 2032, in the case of the 4.55% 2032 Notes and March 15, 2052 in the case of the 4.95% 2052 Notes, we may redeem such notes at any time, in whole or in part, at a price equal to 100% of their principal amount, plus accrued and unpaid interest and a “make-whole” premium. On and after June 15, 2032 in the case of the 4.55% 2032 Notes and March 15, 2052 in the case of the 4.95% 2052 Notes, we may redeem such notes at any time, in whole or in part, at a redemption price equal to 100% of the principal amount of such notes, plus accrued and unpaid interest.

The 4.55% 2032 Notes and 4.95% 2052 Notes were issued in a private placement and were not registered under the Securities Act. In connection with the completion of the sale of the 4.55% 2032 Notes and 4.95% 2052 Notes, we entered into a registration rights agreement with the representatives of the initial purchasers of such notes (the September Registration Rights Agreement). Under the September Registration Rights Agreement, we agreed, subject to certain exceptions, to file a registration statement with the SEC with respect to a registered offer to exchange the 4.55% 2032 Notes and the 4.95% 2052 Notes for publicly registered notes (the September Exchange Offer Registration Statement), or under certain circumstances, a shelf registration statement (the September Shelf Registration Statement). We have agreed to use commercially reasonable efforts to cause the September Exchange Offer Registration Statement to be declared effective under the Securities Act on or prior to October 1, 2023 and to consummate the exchange offer on or prior to November 15, 2023. Oncor agreed to use commercially reasonable efforts to cause any September Shelf Registration Statement to become or be declared effective within the later of 180 days after such September Shelf Registration Statement filing obligation arises and October 15, 2023. If we do not comply with certain of our obligations under the September Registration Rights Agreement, the affected notes will bear additional interest on the principal amount of such affected notes at a rate of 0.50% per annum over the interest rate otherwise provided for under such notes for the period during which the registration default continues, but not later than the second anniversary of the issue date of such notes.

Deed of Trust

Our secured debt is secured equally and ratably by a first priority lien on all property acquired or constructed by Oncor for use in its electricity transmission and distribution business, subject to certain exceptions. The property is mortgaged under the Deed of Trust. The Deed of Trust permits us to secure indebtedness with the lien of the Deed of Trust up to the aggregate of (i) the amount of available bond credits, and (ii) 85% of the lower of the fair value or cost of certain property additions that could be certified to the Deed of Trust collateral agent. At September 30, 2022, the amount of available bond credits was $2.992 billion and the amount of future debt we could secure with property additions, subject to those property additions being certified to the Deed of Trust collateral agent, was $3.715 billion.

Borrowings under the CP Program, the Credit Facility and the term loan credit agreement are not secured.

Fair Value of Long-Term Debt

At September 30, 2022 and December 31, 2021, the estimated fair value of our long-term debt (including current maturities) totaled $10.175 billion and $11.758 billion, respectively, and the carrying amount totaled $11.226 billion and $10.032 billion, respectively. The fair value is estimated using observable market data, representing Level 2 valuations under accounting standards related to the determination of fair value.