DEBT OBLIGATIONS AND CREDIT FACILITIES

3 Months Ended

Mar. 31, 2020

Prior to the Restructuring, the Company’s financial statements reflected debt and debt service of the entire Oaktree Operating Group. OCM, Oaktree Capital I, Oaktree Capital II and Oaktree AIF are co-obligors and jointly and severally liable for all debt obligations listed below, however, debt obligations are reflected in the condensed consolidated financial statements based upon the entity that actually made the borrowing and received the related proceeds. OCM has historically been the only direct borrower or issuer under credit agreements and private placement notes with third parties and made all payments of principal and interest. In connection with the Restructuring, debt obligations with a net carrying amount of $746.3 million related to OCM were transferred as part of the deconsolidation of entities effective October 1, 2019. Accordingly, the Company’s financial statements after the Restructuring generally will not reflect debt obligations, interest expense or related liabilities associated with its operating subsidiaries, until such time as Oaktree Capital I directly borrows or issues notes under such arrangements.

As of March 31, 2020, Oaktree Capital I is jointly and severally liable, along with its co-obligors, for the debt obligations listed below with an aggregate outstanding principal balance of $750 million. The Company’s maximum exposure to these debt obligations is set forth below:


	As of
	March 31, 2020		December 31, 2019

$250,000, 3.78%, issued in December 2017, payable on December 18, 2032	$	250,000	$	250,000
Credit facility, issued in March 2014, variable rate obligations payable on December 13, 2024 ⁽¹⁾	150,000		150,000
$50,000, 3.91%, issued in September 2014, payable on September 3, 2024	50,000		50,000
$100,000, 4.01%, issued in September 2014, payable on September 3, 2026	100,000		100,000
$100,000, 4.21%, issued in September 2014, payable on September 3, 2029	100,000		100,000
$100,000, 3.69%, issued in July 2016, payable on July 12, 2031	100,000		100,000
Total remaining principal	$	750,000	$	750,000

⁽¹⁾ On December 13, 2019, the credit facility was amended to among other things, increase the revolving loan commitment from $500 million to $650 million, provide for the refinancing of the then-outstanding $150 million term loan with revolving loans, extend the maturity date from March 29, 2023 to December 13, 2024, favorably update the commitment fee and interest rate in the corporate ratings-based pricing grid and increase the asset under management covenant threshold from $60 billion to $65 billion. Borrowings generally bear interest at a spread to either LIBOR or an alternative base rate. Based on the current credit ratings of OCM, the interest rate on borrowings is LIBOR plus 0.88% per annum and the commitment fee on the unused portions of the revolving credit facility is 0.08% per annum. The credit agreement contains customary financial covenants and restrictions, including ones regarding a maximum leverage ratio and a minimum required level of assets under management (as defined in the credit agreement, as amended above). As of March 31, 2020, OCM had $150 million outstanding under the revolving credit facility and the Company had no outstanding borrowings under the revolving credit facility. OCM and the Company were in compliance with all financial maintenance covenants associated with its senior notes and bank credit facility as of March 31, 2020 and December 31, 2019, respectively.

Credit Facilities of the Consolidated Funds

Certain consolidated funds may maintain revolving credit facilities that are secured by the assets of the fund or may issue senior variable rate notes to fund investments on a longer term basis, generally up to ten years. The obligations of the consolidated funds are nonrecourse to the Company.

The consolidated funds had the following debt obligations outstanding:


	Outstanding Amount as of						Facility Capacity	Weighted Average Interest Rate	Weighted Average Remaining Maturity (years)	Commitment Fee Rate	L/C Fee
Credit Agreement	March 31, 2020		December 31, 2019
Revolving credit facility	$	75,961	$	—	€	120,000	1.99%	2.8	0.20%	1.50%
Senior variable rate notes	187,311		159,411		$	187,311	2.77	7.1	N/A	N/A
Less: Debt issuance costs	(1,250)		(934)
Total debt obligations, net	$	262,022	$	158,477

As of March 31, 2020 and December 31, 2019, the consolidated funds had debt obligations with an aggregate outstanding principal balance of $263.3 million and $159.4 million, respectively. The fair value of the senior variable rate notes is a Level III valuation and aggregated $263.3 million and $159.1 million as of March 31, 2020 and December 31, 2019, respectively, using prices obtained from pricing vendors. Financial instruments that are valued using quoted prices for the security or similar securities are generally classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities, or may require adjustment for investment-specific factors or restrictions.

As a result of the Restructuring, senior variable rate notes and debt issuance costs of $870.7 million and $4.6 million, respectively, were transferred as part of the deconsolidation of entities effective October 1, 2019.

Debt Obligations of CLOs

Debt obligations of CLOs represent amounts due to holders of debt securities issued by the CLOs, as well as term loans of CLOs that had not priced as of period end. Outstanding debt obligations of CLOs were as follows:


	As of March 31, 2020							As of December 31, 2019
	Fair Value ⁽¹⁾		Weighted Average Interest Rate	Weighted Average Remaining Maturity (years)	Fair Value ⁽¹⁾		Weighted Average Interest Rate	Weighted Average Remaining Maturity (years)
Senior secured notes	$	5,126,069	2.74%	10.5	$	5,613,846	2.85%	8.6
Subordinated notes ⁽²⁾	104,536		N/A	10.7	154,153		N/A	10.4
Total CLO debt obligations	$	5,230,605			$	5,767,999

(1) The fair value of CLO liabilities was measured as the fair value of CLO assets less the sum of (a) the fair value of any beneficial interests held by the Company and (b) the carrying value of any beneficial interests that represent compensation for services. Please see notes 2 and 6 for more information.

(2) The subordinated notes do not have a contractual interest rate; instead, they receive distributions from the excess cash flows generated by the CLO.

The debt obligations of CLOs are nonrecourse to the Company and are backed by the investments held by the respective CLO. Assets of one CLO may not be used to satisfy the liabilities of another. As of March 31, 2020 and December 31, 2019, the fair value of CLO assets was $5.7 billion and $6.4 billion, respectively, and consisted of cash, corporate loans, corporate bonds and other securities.

As of March 31, 2020, future scheduled principal or par value payments with respect to the debt obligations of CLOs were as follows:


Remainder of 2020	$	83,739
2021	—
2022	—
2023	—
2024	—
Thereafter	5,979,053
Total	$	6,062,792