Debt (Notes)

9 Months Ended

Sep. 30, 2020

13. Debt


	September 30, 2020		December 31, 2019
	(millions)




Senior notes:



Issued March 2010, interest at 5.350% payable semi-annually, due March 2020 (a)	$	—	$	600
Issued September 2011, interest at 4.750% payable semi-annually, due September 2021	500		500
Issued March 2012, interest at 4.950% payable semi-annually, due April 2022	350		350
Issued March 2013, interest at 3.875% payable semi-annually, due March 2023	500		500
Issued July 2018 and January 2019, interest at 5.375% payable semi-annually, due July 2025	825		825
Issued June 2020, interest at 5.625% payable semi-annually, due July 2027	500		—
Issued May 2019, interest at 5.125% payable semi-annually, due May 2029	600		600
Issued August 2000, interest at 8.125% payable semi-annually, due August 2030 (a)	300		300
Issued October 2006, interest at 6.450% payable semi-annually, due November 2036	300		300
Issued September 2007, interest at 6.750% payable semi-annually, due September 2037	450		450
Issued March 2014, interest at 5.600% payable semi-annually, due April 2044	400		400
Junior subordinated notes:
Issued May 2013, interest at 5.850% payable semi-annually, due May 2043	550		550
Credit agreement:
Revolving credit facility, weighted-average variable interest rate of 1.510%, as of September 30, 2020, due December 2024	125		200
Accounts receivable securitization facility:
Accounts receivable securitization facility, weighted-average variable interest rate of 1.050% as of September 30, 2020, due August 2022	350		350
Fair value adjustments related to interest rate swap fair value hedges (a)	18		19
Unamortized issuance costs	(40)		(37)
Unamortized discount, net	(7)		(8)
Finance lease liabilities	27		25
Total debt	5,748		5,924
Current finance lease liabilities	4		3
Current debt	500		600
Total long-term debt	$	5,244	$	5,321

(a) The swaps associated with this debt were previously terminated. The remaining long-term fair value related to the swaps is being amortized as a reduction to interest expense through 2030, the original maturity dates of the debt.

Senior Notes Issuance

On June 24, 2020, we issued $500 million aggregate principal amount of 5.625% Senior Notes due July 2027, unless redeemed prior to maturity. We received proceeds of $494 million, net of underwriters' fees and related expenses, which we used for general partnership purposes, including the repayment of indebtedness under our Credit Agreement and the funding of capital expenditures. Interest on the notes is payable semi-annually in arrears on January 15 and July 15 of each year, commencing January 15, 2021.

Senior Notes and Junior Subordinated Notes

Our senior notes and junior subordinated notes, collectively referred to as our debt securities, mature and become payable on their respective due dates, and are not subject to any sinking fund or mandatory redemption provisions. The senior notes are senior unsecured obligations that are guaranteed by the Partnership and rank equally in a right of payment with our other senior unsecured indebtedness, including indebtedness under our Credit Agreement, and the junior subordinated notes are unsecured and rank subordinate in right of payment to all of our existing and future senior indebtedness. The debt securities include an optional redemption whereby we may elect to redeem the notes, in whole or in part from time-to-time for a premium.

Additionally, we may defer the payment of all or part of the interest on the junior subordinated notes for one or more periods up to 5 consecutive years. The underwriters’ fees and related expenses are recorded in our condensed consolidated balance sheets within the carrying amount of long-term debt and will be amortized over the term of the notes.

Credit Agreement

We are a party to a $1.4 billion unsecured revolving Credit Agreement, which matures on December 9, 2024. The Credit Agreement also grants us the option to increase the revolving loan commitment by an aggregate principal amount of up to $500 million, subject to requisite lender approval. The Credit Agreement may be extended for up to two additional one-year periods subject to requisite lender approval. Loans under the Credit Agreement may be used for working capital and other general partnership purposes including acquisitions.

The Credit Agreement allows for unrestricted cash and cash equivalents to be netted against consolidated indebtedness for purposes of calculating the Partnership’s Consolidated Leverage Ratio (as defined in the Credit Agreement). Additionally, under the Credit Agreement, the Consolidated Leverage Ratio of the Partnership as of the end of any fiscal quarter shall not exceed 5.00 to 1.0; provided that, if there is a Qualified Acquisition (as defined in the Credit Agreement), the maximum Consolidated Leverage Ratio shall not exceed 5.50 to 1.0 at the end of the three consecutive fiscal quarters, including the fiscal quarter in which the Qualified Acquisition occurs.

Our cost of borrowing under the Credit Agreement is determined by a ratings-based pricing grid. Indebtedness under the Credit Agreement bears interest at either: (1) LIBOR, plus an applicable margin of 1.35% based on our current credit rating; or (2) (a) the base rate which shall be the higher of the prime rate, the Federal Funds rate plus 0.50% or the LIBOR Market Index rate plus 1.00%, plus (b) an applicable margin of 0.35% based on our current credit rating. The Credit Agreement incurs an annual facility fee of 0.275% based on our current credit rating. This fee is paid on drawn and undrawn portions of the $1.4 billion revolving credit facility.

As of September 30, 2020, we had unused borrowing capacity of $1,265 million, net of $125 million of outstanding borrowings and $10 million of letters of credit, under the Credit Agreement. Our borrowing capacity may be limited by financial covenants set forth in the Credit Agreement. The financial covenants set forth in the Credit Agreement limit the Partnership's ability to incur incremental debt by the unused borrowing capacity of $1,265 million as of September 30, 2020. Except in the case of a default, amounts borrowed under our Credit Agreement will not become due prior to the December 9, 2024 maturity date.

Accounts Receivable Securitization Facility

The Securitization Facility provides up to $350 million of borrowing capacity through August 2022 at LIBOR market index rates plus a margin. Under this Securitization Facility, certain of the Partnership’s wholly owned subsidiaries sell or contribute receivables to another of the Partnership’s consolidated subsidiaries, DCP Receivables LLC (“DCP Receivables”), a bankruptcy-remote special purpose entity created for the sole purpose of the Securitization Facility.

DCP Receivables’ sole activity consists of purchasing receivables from the Partnership’s wholly owned subsidiaries that participate in the Securitization Facility and providing these receivables as collateral for DCP Receivables’ borrowings under the Securitization Facility. DCP Receivables is a separate legal entity and the accounts receivable of DCP Receivables, up to the amount of the outstanding debt under the Securitization Facility, are not available to satisfy the claims of creditors of the Partnership, its subsidiaries selling receivables under the Securitization Facility, or their affiliates. Any excess receivables are eligible to satisfy the claims of creditors of the Partnership, its subsidiaries selling receivables under the Securitization Facility, or their affiliates. The amount available for borrowing may be limited by the availability of eligible receivables and other customary factors and conditions, as well as the covenants set forth in the Securitization Facility. As of September 30, 2020, DCP Receivables had $614 million of our accounts receivable securing borrowings of $350 million under the Securitization Facility.

The maturities of our debt as of September 30, 2020 are as follows:


	Debt Maturities
	(millions)

2021	$	500
2022	700
2023	500
2024	125
Thereafter	3,925
Total debt	$	5,750