The weighted-average interest rate for commercial paper was 1.6 percent at December 31, 2019. The weighted-average interest rate for short-term loans was 3.2 percent and 5.2 percent at March 31, 2020 and December 31, 2019, respectively. The weighted-average interest rate for secured borrowings was 3.1 percent and 3.6 percent at March 31, 2020 and December 31, 2019, respectively. Short-term financing receivables pledged as collateral for short-term secured borrowings were $240 million at March 31, 2020 and $280 million at December 31, 2019. The weighted-average interest rate for short-term debt payable to IBM was 0.6 percent and 1.6 percent at March 31, 2020 and December 31, 2019, respectively.

The portion of the company's fixed-rate debt obligations that is hedged is reflected in the Consolidated Balance Sheet as an amount equal to the sum of the debt's carrying value and a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates.

The company utilizes certain of its financing receivables as collateral. Long-term financing receivables pledged as collateral for long-term secured borrowings were $674 million at March 31, 2020 and $781 million at December 31, 2019.

The company’s indenture governing its debt securities contains significant covenants which obligate the company to promptly pay principal and interest, limit the aggregate amount of liens (other than permitted liens as such term is defined under the indenture) to 15 percent of the company’s consolidated net tangible assets, and restrict the company’s ability to merge or consolidate unless certain conditions are met.

Pre-swap annual contractual obligations of long-term debt and long-term debt payable to IBM outstanding at March 31, 2020 are as follows:


	2020										2025 and
(Dollars in millions)	(Q2-Q4)		2021		2022		2023		2024		beyond		Total
Long-term debt	$	1,839	$	3,133	$	603	$	786	$	5	$	0	$	6,367
Debt payable to IBM		3,210		2,615		1,761		675		201		56		8,517
Total	$	5,049	$	5,748	$	2,365	$	1,461	$	205	$	56	$	14,884

Interest on Debt

The company recognized interest expense of $94 million for the three months ended March 31, 2020, of which $49 million was interest expense on debt payable to IBM. The company recognized interest expense of $150 million for the three months ended March 31, 2019, of which $74 million was interest expense on debt payable to IBM.

Lines of Credit

IBM and the company have a $2.5 billion, 364-Day Credit Agreement and a $2.5 billion Three-Year Credit Agreement (together, the Credit Agreements) with maturity dates of July 16, 2020 and July 20, 2022, respectively.

As of March 31, 2020, the company had no borrowings outstanding against the Credit Agreements.

The company’s Credit Agreements each contain significant debt covenants, which obligate the company to promptly pay principal and interest, limit the aggregate amount of secured indebtedness and sale and leaseback transactions to 10 percent of IBM’s consolidated net tangible assets, and restrict the ability of the company or IBM to merge or consolidate with a third party, unless certain conditions are met. The Credit Agreements also include several financial covenants, including that (i) IBM will not permit the consolidated net interest expense ratio, for any period of four consecutive fiscal quarters taken as a single accounting period, to be less than 2.20 to 1.0; (ii) the company will not permit its tangible net worth to be less than $50 million as of the end of the fiscal year and (iii) the company’s leverage ratio cannot be greater than 11 to 1 as of the last day of the fiscal quarter. The Credit Agreements each contain a cross default provision with respect to other defaulted indebtedness of at least $500 million.

The company is in compliance with its debt covenants, and provides periodic certifications to its lenders. The failure to comply with its debt covenants could constitute an event of default. If certain events of default were to occur, the principal and interest on the debt to which such event of default applied would become immediately due and payable. The Borrowers are also restricted from amending, modifying or terminating the Support Agreement in any manner materially adverse to the lenders. For additional information on the Support Agreement, see note 14, “Relationship with IBM and Related Party Transactions.”