12. DEBT AND INTEREST EXPENSE

At December 31, 2017, WGP’s debt consisted of borrowings under the WGP RCF and WES’s 5.375% Senior Notes due 2021 (the “2021 Notes”), 4.000% Senior Notes due 2022 (the “2022 Notes”), 2.600% Senior Notes due 2018 (the “2018 Notes”), 5.450% Senior Notes due 2044 (the “2044 Notes”), 3.950% Senior Notes due 2025 (the “2025 Notes”), 4.650% Senior Notes due 2026 (the “2026 Notes”) and borrowings on the WES RCF.

The following table presents WES and WGP’s outstanding debt as of December 31, 2017 and 2016:



	December 31, 2017						December 31, 2016
thousands	Principal		Carrying Value		Fair Value ⁽¹⁾		Principal		Carrying Value		Fair Value ⁽¹⁾
WGP RCF	$	28,000	$	28,000	$	28,000	$	28,000	$	28,000	$	28,000
2021 Notes	500,000		495,815		530,647		500,000		494,734		536,252
2022 Notes	670,000		668,849		684,043		670,000		668,634		681,723
2018 Notes	350,000		349,684		350,631		350,000		349,188		351,531
2044 Notes	600,000		593,234		637,827		600,000		593,132		615,753
2025 Notes	500,000		491,885		500,885		500,000		490,971		492,499
2026 Notes	500,000		495,245		520,144		500,000		494,802		518,441
WES RCF	370,000		370,000		370,000		—		—		—
Total long-term debt	$	3,518,000	$	3,492,712	$	3,622,177	$	3,148,000	$	3,119,461	$	3,224,199


⁽¹⁾	Fair value is measured using the market approach and Level 2 inputs.

12. DEBT AND INTEREST EXPENSE (CONTINUED)

Debt activity. The following table presents WES and WGP’s debt activity for the years ended December 31, 2017 and 2016:



thousands	Carrying Value
Balance at December 31, 2015	$	2,690,651
WES RCF borrowings	600,000
Issuance of 2026 Notes	500,000
Issuance of 2044 Notes	200,000
Repayments of WES RCF borrowings	(900,000		)
WGP RCF borrowings	28,000
Other	810
Balance at December 31, 2016	$	3,119,461
WES RCF borrowings	370,000
Other	3,251
Balance at December 31, 2017	$	3,492,712

WGP RCF. In March 2016, WGP entered into a $250.0 million WGP RCF, which matures in March 2019. The WGP RCF may be used to buy WES common units and for general partnership purposes. The WGP RCF contains an accordion feature whereby WGP can increase the commitments under the WGP RCF up to an aggregate of $500.0 million, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent.

In 2016, WGP borrowed $28.0 million under the WGP RCF to fund the purchase of 835,841 WES common units (see Note 2) and to pay fees and expenses associated with entering into the WGP RCF. Pursuant to a collateral agreement with the WGP RCF lenders, WGP’s obligations under the WGP RCF are secured by a first priority lien on all of WGP’s assets (not including the consolidated assets of WES), as well as all present and after acquired equity interests owned by WGP in WES GP and WES. Borrowings under the WGP RCF bear interest, at WGP’s option, at either (a) a base rate equal to the greatest of (i) the Prime Rate, (ii) the Federal Funds Effective Rate plus 0.50% and (iii) London Interbank Offered Rate (“LIBOR”) plus 1.00%, in each case plus applicable margins ranging from 1.00% to 1.75% based upon WGP’s consolidated leverage ratio or (b) LIBOR (with a floor of 0%), plus applicable margins ranging from 2.00% to 2.75% based upon WGP’s consolidated leverage ratio. The unused portion of the WGP RCF is subject to a quarterly commitment fee ranging from 0.30% to 0.50% per annum on the daily unused amount of the WGP RCF based upon WGP’s consolidated leverage ratio. The commitment fee rate on the WGP RCF was 0.30% at December 31, 2017 and 2016.

As of December 31, 2017, WGP had $28.0 million of outstanding borrowings ($222.0 million of available borrowing capacity) and was in compliance with all covenants under the WGP RCF. As of December 31, 2017 and 2016, the interest rate on the outstanding WGP RCF borrowings was 3.57% and 2.77%, respectively. In February 2018, WGP voluntarily reduced the aggregate commitments of the lenders under the WGP RCF to $35.0 million.

WGP WCF. The WGP WCF matured on November 1, 2017.

WES Senior Notes. The 2018 Notes, which are due in August 2018, were classified as long-term debt on the consolidated balance sheet at December 31, 2017, as WES has the ability and intent to refinance these obligations using long-term debt. In October 2016, WES issued an additional $200.0 million in aggregate principal amount of 2044 Notes at a price to the public of 102.776% of the face amount plus accrued interest from October 1, 2016 to the settlement date. These notes were offered as additional notes under the indenture governing the 2044 Notes issued in March 2014 and are treated as a single class of securities with the 2044 Notes under such indenture. Including the effects of (i) the issuance premium for the October 2016 offering of the 2044 Notes, (ii) the issuance discount for the March 2014 offering of the 2044 Notes and (iii) the underwriting discounts, the effective interest rate of the 2044 Notes is 5.530%. Proceeds (net of underwriting discount of $1.8 million and debt issuance costs and excluding accrued interest from October 1, 2016 to the settlement date) were used to repay amounts then outstanding under the WES RCF and for general partnership purposes, including capital expenditures.

12. DEBT AND INTEREST EXPENSE (CONTINUED)

The 2026 Notes issued in July 2016 were offered at a price to the public of 99.796% of the face amount. Including the effects of the issuance and underwriting discounts, the effective interest rate of the 2026 Notes is 4.787%. Interest is paid semi-annually on January 1 and July 1 of each year. Proceeds (net of underwriting discount of $3.1 million, original issue discount and debt issuance costs) were used to repay a portion of the amount outstanding under the WES RCF.

At December 31, 2017, WES was in compliance with all covenants under the indentures governing its outstanding notes.

WES RCF. The $1.2 billion WES RCF, which is expandable to a maximum of $1.5 billion, bears interest at LIBOR, plus applicable margins ranging from 0.975% to 1.45%, or an alternate base rate equal to the greatest of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus 0.50%, or (c) LIBOR plus 1.00%, in each case plus applicable margins currently ranging from zero to 0.45%, based upon WES’s senior unsecured debt rating. In December 2016, the WES RCF was amended to extend the maturity date from February 2019 to February 2020. WES is required to pay a quarterly facility fee currently ranging from 0.15% to 0.30% of the commitment amount (whether used or unused), based upon its senior unsecured debt rating. The facility fee rate was 0.20% at December 31, 2017 and 2016.

As of December 31, 2017, WES had $370.0 million of outstanding WES RCF borrowings and $4.6 million in outstanding letters of credit (resulting in $825.4 million available borrowing capacity), and was in compliance with all covenants under the WES RCF. As of December 31, 2017 and 2016, the interest rate on the outstanding WES RCF borrowings was 2.87% and 2.07%, respectively. In February 2018, the WES RCF was amended to extend the maturity date from February 2020 to February 2023 and expand borrowing capacity to $1.5 billion.

All of WES’s notes and obligations under the WES RCF are recourse to WES GP. WES GP is indemnified by wholly owned subsidiaries of Anadarko against any claims made against WES GP for WES’s long-term debt and/or borrowings under the WES RCF.

Interest expense. The following table summarizes the amounts included in interest expense:



	Year Ended December 31,
thousands	2017			2016			2015
Third parties
Long-term debt	$	(143,400	)	$	(122,428	)	$	(102,058	)
Amortization of debt issuance costs and commitment fees	(7,970		)	(7,509		)	(5,734		)
Capitalized interest	6,826			5,562			8,318
Total interest expense – third parties	(144,544		)	(124,375		)	(99,474		)
Affiliates
WGP WCF	—			—			(2		)
Deferred purchase price obligation – Anadarko ⁽¹⁾	(71		)	7,747			(14,398		)
Total interest expense – affiliates	(71		)	7,747			(14,400		)
Interest expense	$	(144,615	)	$	(116,628	)	$	(113,874	)


⁽¹⁾	See Note 2 for a discussion of the Deferred purchase price obligation - Anadarko.