Derivative Instruments

3 Months Ended

Mar. 31, 2024

Derivative Instruments

Derivative Instruments

13. 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 March 31, 2024, we had cross-currency interest rate swaps outstanding with notional amounts of $1.7 billion and maturity dates ranging through 2028.

The effect of these net investment hedges on accumulated other comprehensive loss and the condensed consolidated income statements for the three months ended March 31, 2024 and 2023 was as follows (in thousands):

		Three Months Ended March 31,
		2024		2023
Cross-currency interest rate swaps (included component) (1)		$	(52,030)	$	14,365
Cross-currency interest rate swaps (excluded component) (2)			5,649		(9,478)
Total		$	(46,381)	$	4,887
	Location of	Three Months Ended March 31,
	gain or (loss)	2024		2023
Cross-currency interest rate swaps (excluded component) (2)	Interest expense	$	6,103	$	5,589

(1) Included component represents foreign exchange spot rates.

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

Cash Flow Hedges  

As of March 31, 2024, we had derivatives designated as cash flow hedges on 50% of the Euro Term Loan Facilities (€750 million notional amount) and 100% of the USD term loan ($500 million notional amount). 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 March 31, 2024, we estimate that an additional $8.3 million will be reclassified as a decrease to interest expense during the twelve months ended March 31, 2025, when the hedged forecasted transactions impact earnings.

The effect of these cash flow hedges on accumulated other comprehensive income and the condensed consolidated income statements for the three months ended March 31, 2024 and 2023 was as follows (in thousands):

	Three Months Ended March 31,
	2024		2023
Interest rate swaps	$	(12,324)	$	1,084

	Location of	Three Months Ended March 31,
	gain or (loss)	2024		2023
Interest rate swaps	Interest expense	$	4,227	$	549

Fair Value of Derivative Instruments

The subsequent table presents the fair value of derivative instruments recognized in our condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023 (in thousands):

	March 31, 2024				December 31, 2023
	Assets (1)		Liabilities (2)		Assets (1)		Liabilities (2)
Cross-currency interest rate swaps	$	10,060	$	120,432	$	—	$	156,753
Interest rate swaps		17,089		—		8,538		—
	$	27,149	$	120,432	$	8,538	$	156,753

(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.