13. BORROWINGS

The Partnership borrows and enters into credit agreements for its general operating and investment purposes and certain Blackstone Funds borrow to meet financing needs of their operating and investing activities. Borrowing facilities have been established for the benefit of selected Blackstone Funds. When a Blackstone Fund borrows from the facility in which it participates, the proceeds from the borrowing are strictly limited for its intended use by the borrowing fund and not available for other Partnership purposes. The Partnership’s credit facilities consist of the following:


	December 31,
	2013							2012
	Credit Available		Borrowing Outstanding		Weighted Average Interest Rate			Credit Available		Borrowing Outstanding		Weighted Average Interest Rate
Revolving Credit Facility (a)	$	1,100,000	$	717		1.25	%	$	1,100,000	$	717		1.25	%
Blackstone Issued 6.625% Notes Due 8/15/2019 (b) (e)		585,000		585,000		6.63	%		585,000		585,000		6.63	%
Blackstone Issued 5.875% Notes Due 3/15/2021 (c) (e)		400,000		400,000		5.88	%		400,000		400,000		5.88	%
Blackstone Issued 4.750% Notes Due 2/15/2023 (d) (e)		400,000		400,000		4.75	%		400,000		400,000		4.75	%
Blackstone Issued 6.250% Notes Due 8/15/2042 (d) (e)		250,000		250,000		6.25	%		250,000		250,000		6.25	%
Operating Entities Facilities (f)		—		—		n/a			6,228		6,228		1.03	%

		2,735,000		1,635,717		5.92	%		2,741,228		1,641,945		5.90	%
Blackstone Fund Facilities (g)		13,075		13,075		3.19	%		23,842		23,842		2.03	%
CLO Vehicles (h)		9,891,473		9,826,621		1.09	%		13,055,784		12,967,302		1.34	%

	$	12,639,548	$	11,475,413		1.78	%	$	15,820,854	$	14,633,089		1.86	%

(a)

Blackstone, through indirect subsidiaries, has a $1.1 billion unsecured revolving credit facility (the “Credit Facility”) with Citibank, N.A., as Administrative Agent with a maturity date of July 13, 2017. Interest on the borrowings is based on an adjusted LIBOR rate or alternate base rate, in each case plus a margin, and undrawn commitments bear a commitment fee. Borrowings may also be made in U.K. sterling or euros, in each case subject to certain sub-limits. The Credit Facility contains customary representations, covenants and events of default. Financial covenants consist of a maximum net leverage ratio and a requirement to keep a minimum amount of fee-earning assets under management, each tested quarterly. As of December 31, 2013, there was an outstanding but undrawn letter of credit against the credit facility for $0.7 million.

(b)

On August 20, 2009, Blackstone Holdings Finance Co. L.L.C. (the “Issuer”), an indirect subsidiary of the Partnership, issued $600 million of senior notes. The notes, which were issued at a discount, accrue interest from August 20, 2009. Interest is paid semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2010. Interest expense on the notes was $38.8 million, $39.4 million and $39.8 million for the years ended December 31, 2013, December 31, 2012 and December 31, 2011, respectively. The carrying and fair values are determined using the original $600 million par amount less $15 million attributable to these notes which were acquired but not retired by Blackstone during 2012.

(c)

On September 15, 2010, the Issuer issued $400 million of senior notes. The notes, which were issued at a discount, accrue interest from September 20, 2010. Interest is payable semiannually in arrears on March 15 and September 15 of each year, commencing on March 15, 2011. Interest expense on the notes was $23.5 million, $23.5 million and $23.5 million for the years ended December 31, 2013, December 31, 2012 and December 31, 2011, respectively.

(d)

On August 17, 2012, the Issuer issued $400 million of senior notes due February 15, 2023 and $250 million of senior notes maturing August 15, 2042. The notes, which were issued at a discount, accrue interest from August 17, 2012. Interest is payable semiannually in arrears on February 15 and September 15 of each year, commencing on February 15, 2013. Interest expense on the $400 million note was $19.0 million and $7.1 million for the years ended December 31, 2013 and December 31, 2012, respectively. Interest expense on the $250 million note was $15.6 million and $5.8 million for the years ended December 31, 2013 and December 31, 2012, respectively.

(e)

Represents long term borrowings in the form of senior notes (the “Notes”) issued by the Issuer. The Notes are unsecured and unsubordinated obligations of the Issuer. The Notes are fully and unconditionally guaranteed, jointly and severally, by the Partnership, Blackstone Holdings, and the Issuer (the “Guarantors”). The guarantees are unsecured and unsubordinated obligations of the Guarantors. Transaction costs related to the issuance of the Notes have been capitalized and are being amortized over the life of the Notes. The indentures include covenants, including limitations on the Issuer’s and the Guarantors’ ability to, subject to exceptions, incur indebtedness secured by liens on voting stock or profit participating equity interests of their subsidiaries or merge, consolidate or sell, transfer or lease assets. The indentures also provide for events of default and further provide that the trustee or the holders of not less than 25% in aggregate principal amount of the outstanding Notes may declare the Notes immediately due and payable upon the occurrence and during the continuance of any event of default after expiration of any applicable grace period. In the case of specified events of bankruptcy, insolvency, receivership or reorganization, the principal amount of the Notes and any accrued and unpaid interest on the Notes automatically become due and payable. All or a portion of the Notes may be redeemed at the Issuer’s option in whole or in part, at any time and from time to time, prior to their stated maturity, at the make-whole redemption price set forth in the Notes. If a change of control repurchase event occurs, the holders of the Notes may require the Issuer to repurchase the Notes at a repurchase price in cash equal to 101% of the aggregate principal amount of the Notes repurchased plus any accrued and unpaid interest on the Notes repurchased to, but not including, the date of repurchase.

(f)	Represents borrowings under a capital asset purchase facility. The capital asset purchase facility is secured by the purchased asset and borrowings bear interest at a spread to LIBOR. The borrowings were paid down during 2013.

(g)

Represents borrowing facilities for the various consolidated Blackstone Funds used to meet liquidity and investing needs. Certain borrowings under these facilities were used for bridge financing and general liquidity purposes. Other borrowings were used to finance the purchase of investments with the borrowing remaining in place until the disposition or refinancing event. Such borrowings have varying maturities and are rolled over until the disposition or a refinancing event. Because the timing of such events is unknown and may occur in the near term, these borrowings are considered short-term in nature. Borrowings bear interest at spreads to market rates. Borrowings were secured according to the terms of each facility and are generally secured by the investment purchased with the proceeds of the borrowing and/or the uncalled capital commitment of each respective fund. Certain facilities have commitment fees. When a fund borrows, the proceeds are available only for use by that fund and are not available for the benefit of other funds. Collateral within each fund is also available only against the borrowings by that fund and not against the borrowings of other funds.

(h)	Represents borrowings due to the holders of debt securities issued by CLO vehicles consolidated by Blackstone. These amounts are included within Loans Payable and Due to Affiliates within the Consolidated Statements of Financial Condition.

The carrying value and fair value of the Blackstone issued notes, included in Loans Payable within the Consolidated Statements of Financial Condition, were:


	December 31,
	2013				2012
	Carrying Value		Fair Value (a)		Carrying Value		Fair Value (a)
Blackstone Issued 6.625%, $600 Million Par, Notes Due 8/15/2019 (b)	$	632,823	$	684,860	$	640,220	$	682,344
Blackstone Issued 5.875%, $400 Million Par, Notes Due 3/15/2021	$	398,543	$	447,120	$	398,386	$	456,200
Blackstone Issued 4.750%, $400 Million Par, Notes Due 2/15/2023	$	393,202	$	415,760	$	392,629	$	426,160
Blackstone Issued 6.250%, $250 Million Par, Notes Due 8/15/2042	$	239,738	$	278,550	$	239,619	$	275,275

(a)	Fair value is determined by broker quote and these notes would be classified as Level II within the fair value hierarchy.

(b)	The carrying and fair values are determined using the original $600 million par amount less $15 million attributable to these notes which were acquired but not retired by Blackstone during 2012.

Included within Loans Payable and Due to Affiliates within the Consolidated Statements of Financial Condition are amounts due to holders of debt securities issued by Blackstone’s consolidated CLO vehicles. Borrowings through the consolidated CLO vehicles consisted of the following:


	December 31,
	2013							2012
	Borrowing Outstanding		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years		Borrowing Outstanding		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years
Senior Secured Notes	$	8,605,553		1.09	%		4.1	$	11,518,111		1.34	%		4.6
Subordinated Notes		1,221,068		(a	)		N/A		1,449,191		(a	)		2.6

	$	9,826,621						$	12,967,302

(a)	The Subordinated Notes do not have contractual interest rates but instead receive distributions from the excess cash flows of the CLO vehicles.

Senior Secured Notes and Subordinated Notes comprise the following amounts:


	December 31,
	2013						2012
	Fair Value		Amounts Due to Non- Consolidated Affiliates				Fair Value		Amounts Due to Non- Consolidated Affiliates
	Fair Value		Borrowing Outstanding		Fair Value		Fair Value		Borrowing Outstanding		Fair Value
Senior Secured Notes	$	8,302,572	$	14,500	$	13,732	$	10,695,136	$	22,000	$	18,229
Subordinated Notes	$	610,435	$	224,444	$	110,197	$	846,471	$	258,156	$	172,899

The Loans Payable of the consolidated CLO vehicles are collateralized by assets held by each respective CLO vehicle and assets of one vehicle may not be used to satisfy the liabilities of another. As of December 31, 2013 and 2012, the fair value of the consolidated CLO assets was $9.5 billion and $12.5 billion, respectively. This collateral consisted of Cash, Corporate Loans, Corporate Bonds and other securities.

As part of Blackstone’s borrowing arrangements, the Partnership is subject to certain financial and operating covenants. The Partnership was in compliance with all of its loan covenants as of December 31, 2013.

Scheduled principal payments for borrowings at December 31, 2013 are as follows:


	Operating Borrowings		Blackstone Fund Facilities / CLO Vehicles		Total Borrowings
2014	$	—	$	8,066	$	8,066
2015		—		5,009		5,009
2018 and Thereafter		1,635,000		9,826,621		11,461,621

Total	$	1,635,000	$	9,839,696	$	11,474,696