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Derivative Instruments and Hedging Activities (Tables)
 9 Months Ended
Sep. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Foreign Currency Forward Contracts
As at September 30, 2018, the Partnership was committed to the following foreign currency forward contracts:
 
Contract Amount
in Foreign
Currency
(thousands)
 
Fair Value / Carrying
Amount of Asset (Liability)
(in thousands of U.S. Dollars)
 

Average
Forward
Rate (1)
Expected Maturity
 
 
 
 
2018
2019
 
 
 
 
(in thousands of U.S. Dollars)
Norwegian Kroner
430,000

 
(1,422
)
 
7.88

 
16,565

 
38,022

Euro
3,000

 
(146
)
 
0.82

 
3,653

 
—

 
 
 
(1,568
)
 
 
 
20,218

 
38,022

(1)Average forward rate represents the contracted amount of foreign currency one U.S. Dollar will buy.
Schedule of Cross Currency Contracts Statement of Financial Position
As at September 30, 2018, the Partnership was committed to the following cross currency swap:
Notional
Amount
NOK
(thousands)
 
Principal
Amount
USD
(thousands)
 
Floating Rate Receivable
 
Fixed Rate
Payable
 
Fair Value /
Asset (Liability)
$
 
Remaining
Term
(years)
 
 
Reference
Rate
 
Margin
 
 
 
 
 
95,000
 
15,409

 
NIBOR
 
4.25
%
 
7.45
%
 
(3,909
)
 
0.3
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest Rate Swap Agreements
As at September 30, 2018, the Partnership and its consolidated subsidiaries were committed to the following interest rate swap agreements:
 
Interest
Rate
Index
 
Notional
Amount
$
 
Fair Value /
Carrying
Amount of
Asset (Liability)
$
 
Weighted-
Average
Remaining
Term
(years)
 
Fixed
Interest
Rate
(%) (1)
U.S. Dollar-denominated interest rate swaps (2)
LIBOR
 
700,000

 
(64,417
)
 
6.7
 
4.1
%
U.S. Dollar-denominated interest rate swaps (3) 
LIBOR
 
802,418

 
(12,097
)
 
3.8
 
3.2
%
 
 
 
1,502,418

 
(76,514
)
 
 
 
 
(1)
Excludes the margin the Partnership pays on its variable-rate debt, which as at September 30, 2018, ranged between 0.90% and 4.30%.
(2)
Notional amount remains constant over the term of the swap.
(3)
Principal amount reduces quarterly or semi-annually.
Derivative Instruments, Gain (Loss)
The following tables exclude any interest rate swap agreements designated and qualifying as cash flow hedges in the Partnership’s equity accounted joint ventures.
Three Months Ended September 30, 2018
 
Three Months Ended September 30, 2017
Effective
 
Effective
 

 
 
 
Effective
 
Effective
 

 
Portion
 
Portion
 

 
 
 
Portion
 
Portion
 

 
Recognized
 
Reclassified
 
Ineffective
 
 
 
Recognized
 
Reclassified
 
Ineffective
 
in AOCI (1)
 
from AOCI (2)
 
Portion (3)
 
 
 
in AOCI (1)
 
from AOCI (2)
 
Portion (3)
 
—

 
58

 
—

 
Interest expense
 
—

 
(424
)
 
—

Interest expense
—

 
58

 
—

 
 
 
—

 
(424
)
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2018
 
Nine Months Ended September 30, 2017
Effective
 
Effective
 

 
 
 
Effective
 
Effective
 

 
Portion
 
Portion
 

 
 
 
Portion
 
Portion
 

 
Recognized
 
Reclassified
 
Ineffective
 
 
 
Recognized
 
Reclassified
 
Ineffective
 
in AOCI (1)
 
from AOCI (2)
 
Portion (3)
 
 
 
in AOCI (1)
 
from AOCI (2)
 
Portion (3)
 
(2,495
)
 
6

 
—

 
Interest expense
 
(460
)
 
(1,186
)
 
(7
)
Interest expense
(2,495
)
 
6

 
—

 
 
 
(460
)
 
(1,186
)
 
(7
)
 
(1)
Effective portion of designated and qualifying cash flow hedges recognized in accumulated other comprehensive income (or AOCI).
(2)
Effective portion of designated and qualifying cash flow hedges recorded in AOCI during the term of the hedging relationship and reclassified to earnings.
(3)
Ineffective portion of designated and qualifying cash flow hedges.
Location and Fair Value Amounts of Assets (Liabilities) of Partnership's Derivative Instruments
The following table presents the location and fair value amounts of derivative instruments, segregated by type of contract, on the Partnership’s balance sheets.
 
Other Current Assets
$
 
Other Assets
$
 
Accrued
Liabilities
$
 
Current
Portion of
Derivative
Liabilities
$
 
Derivative
Liabilities
$
As at September 30, 2018
 
 

 
 
 
 
 
 
Foreign currency contracts
99

 
82

 
—

 
(1,691
)
 
(58
)
Cross currency swaps
—

 
—

 
(91
)
 
(3,818
)
 
—

Interest rate swaps
1,120

 
9,267

 
(2,702
)
 
(15,882
)
 
(68,317
)

1,219

 
9,349

 
(2,793
)
 
(21,391
)
 
(68,375
)
 
 
 
 
 
 
 
 
 
 
As at December 31, 2017

 

 

 

 

Foreign currency contracts
347

 
28

 
—

 
(665
)
 
(67
)
Cross currency swaps
—

 
—

 
(916
)
 
(4,412
)
 
(38,678
)
Interest rate swaps
233

 
1,565

 
(3,883
)
 
(37,438
)
 
(128,724
)
 
580

 
1,593

 
(4,799
)
 
(42,515
)
 
(167,469
)
Effect of Losses on Derivatives
The effect of the gain (loss) on these derivatives in the consolidated statements of loss for the three and nine months ended September 30, 2018 and 2017 is as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
 
$
 
$
 
$
 
$
Realized (loss) gain on derivative instruments
 
 
 
 
 
 
 
Interest rate swaps
(10,749
)
 
(48,974
)
 
(33,735
)
 
(69,936
)
Foreign currency forward contracts
(747
)
 
1,048

 
242

 
640


(11,496
)
 
(47,926
)
 
(33,493
)
 
(69,296
)
Unrealized gain (loss) on derivative instruments

 

 

 

Interest rate swaps
20,083

 
28,465

 
88,057

 
19,097

Foreign currency forward contracts
794

 
229

 
(1,291
)
 
2,638


20,877

 
28,694

 
86,766

 
21,735

Total realized and unrealized gain (loss) on derivative instruments
9,381

 
(19,232
)
 
53,273

 
(47,561
)
Effect of Gain on Cross Currency Swaps on Consolidated Statements of Income (Loss)
The effect of the gain (loss) on cross currency swaps in the consolidated statements of loss for the three and nine months ended September 30, 2018 and 2017 is as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
 
$
 
$
 
$
 
$
Realized loss
(36,768
)
 
(42,987
)
 
(39,504
)
 
(49,501
)
Unrealized gain
37,367

 
54,488

 
39,272

 
66,978

Total realized and unrealized gain (loss) on cross currency swaps
599

 
11,501

 
(232
)
 
17,477