Derivative Instruments

9 Months Ended

Sep. 30, 2022

Derivative Instruments

Derivative Instruments

14. Derivative Instruments

Derivatives Designated as Hedging Instruments

Net Investment Hedges

In September 2022, we entered into cross-currency interest rate swaps, which effectively convert a portion of our U.S. dollar-denominated fixed-rate debt to foreign currency-denominated fixed-rate debt in order to hedge the currency exposure associated with our net investment in foreign subsidiaries. As of September 30, 2022, we had cross-currency interest rate swaps outstanding with notional amounts of $1.55 billion and maturity dates ranging through 2028. We had no such instruments outstanding as of December 31, 2021.

The effect of these net investment hedges on accumulated other comprehensive income and the condensed consolidated income statements for the three and nine months ended September 30, 2022 and 2021 was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Cross-currency interest rate swaps (included component) (1)	$	(26,141)	$	—	$	(26,141)	$	—
Cross-currency interest rate swaps (excluded component) (2)		28,849		—		28,849		—
Total	$	2,708	$	—	$	2,708	$	—

		Three Months Ended September 30,				Nine Months Ended September 30,
	Location of gain or (loss)	2022		2021		2022		2021
Cross-currency interest rate swaps (excluded component) (2)	Interest expense	$	650	$	—	$	650	$	—

(1) Included component represents foreign exchange spot rates.

(2) Excluded component represents cross-currency basis spread and interest rates.

Cash Flow Hedges  

We had no material outstanding derivatives designated as cash flow hedges as of September 30, 2022 or December 31, 2021. Amounts reported in accumulated other comprehensive loss related to interest rate swaps are reclassified to interest expense as interest payments are made on our debt. As of September 30, 2022, we had no material interest rate swap agreements outstanding.

Fair Value of Derivative Instruments

The subsequent table presents the fair value of derivative instruments recognized in our condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 (in thousands):

	September 30, 2022				December 31, 2021
	Assets (1)		Liabilities (2)		Assets (1)		Liabilities (2)
Cross-currency interest rate swaps	$	19,063	$	21,771	$	—	$	—

(1) As presented in our condensed consolidated balance sheets within other assets.

(2) As presented in our condensed consolidated balance sheets within accounts payable and other accrued liabilities.