Debt

6 Months Ended

Jun. 30, 2020

Debt

Debt

Note 7—Debt

Overview

Outstanding debt—The aggregate principal amounts and aggregate carrying amounts, net of debt-related balances, including unamortized discounts, premiums, issue costs and fair value adjustments of our debt, were as follows (in millions):

	Principal amount				Carrying amount
	June 30,		December 31,		June 30,		December 31,
	2020		2019		2020		2019
6.50% Senior Notes due November 2020	$	198	$	206	$	198	$	206
6.375% Senior Notes due December 2021		184		222		184		221
5.52% Senior Secured Notes due May 2022		156		200		155		198
3.80% Senior Notes due October 2022		182		190		181		189
0.50% Exchangeable Bonds due January 2023		863		863		862		862
5.375% Senior Secured Notes due May 2023		503		525		498		518
9.00% Senior Notes due July 2023		—		714		—		701
5.875% Senior Secured Notes due January 2024		626		667		616		656
7.75% Senior Secured Notes due October 2024		390		420		383		412
6.25% Senior Secured Notes due December 2024		406		437		399		430
6.125% Senior Secured Notes due August 2025		501		534		493		525
7.25% Senior Notes due November 2025		750		750		738		737
7.50% Senior Notes due January 2026		750		750		744		743
6.875% Senior Secured Notes due February 2027		550		550		542		541
8.00% Senior Notes due February 2027		750		—		743		—
7.45% Notes due April 2027		88		88		86		86
8.00% Debentures due April 2027		57		57		57		57
7.00% Notes due June 2028		300		300		305		306
7.50% Notes due April 2031		588		588		585		585
6.80% Senior Notes due March 2038		1,000		1,000		992		991
7.35% Senior Notes due December 2041		300		300		297		297
Total debt		9,142		9,361		9,058		9,261
Less debt due within one year
6.50% Senior Notes due November 2020		198		206		198		206
5.52% Senior Secured Notes due May 2022		90		88		90		87
5.375% Senior Secured Notes due May 2023		31		16		29		14
5.875% Senior Secured Notes due January 2024		83		83		79		79
7.75% Senior Secured Notes due October 2024		60		60		58		58
6.25% Senior Secured Notes due December 2024		62		62		60		60
6.125% Senior Secured Notes due August 2025		66		66		64		64
Total debt due within one year		590		581		578		568
Total long-term debt	$	8,552	$	8,780	$	8,480	$	8,693

Scheduled maturities—At June 30, 2020, the scheduled maturities of our debt were as follows (in millions):

	Total
Twelve months ending June 30,
2021	$	590
2022		618
2023		1,793
2024		643
2025		455
Thereafter		5,043
Total principal amount of debt		9,142
Total debt-related balances, net		(84)
Total carrying amount of debt	$	9,058

Secured Credit Facility—We have a $1.3 billion secured revolving credit facility, established under a bank credit agreement, as amended most recently in December 2019 (the “Secured Credit Facility”), which is scheduled to expire on June 22, 2023.  The Secured Credit Facility is guaranteed by Transocean Ltd. and certain wholly owned subsidiaries.  We may borrow under the Secured Credit Facility at either (1) the reserve adjusted London interbank offered rate plus a margin (the “Secured Credit Facility Margin”), which ranges from 2.625 percent to 3.375 percent based on the credit rating of the Secured Credit Facility, or (2) the base rate specified in the credit agreement plus the Secured Credit Facility Margin, minus one percent per annum.  Throughout the term of the Secured Credit Facility, we pay a facility fee on the amount of the underlying commitment which ranges from 0.375 percent to 1.00 percent based on the credit rating of the Secured Credit Facility.  At June 30, 2020, based on the credit rating of the Secured Credit Facility on that date, the Secured Credit Facility Margin was 3.25 percent and the facility fee was 0.75 percent.  At June 30, 2020, we had no borrowings outstanding, $25 million of letters of credit issued, and we had $1.3 billion of available borrowing capacity under the Secured Credit Facility.

Interest rate adjustments—The interest rates for certain of our notes are subject to adjustment from time to time upon a change to the credit rating of our non-credit enhanced senior unsecured long-term debt.  As of June 30, 2020, the interest rate in effect for the 6.375% senior notes due December 2021, 3.80% senior notes due October 2022 and the 7.35% senior notes due December 2041 was 8.375 percent, 5.80 percent and 9.35 percent, respectively.

Exchangeable bonds—The 0.50% exchangeable senior bonds due January 30, 2023 (the “Exchangeable Bonds”) may be converted at any time prior to the maturity date at an exchange rate of 97.29756 shares per $1,000 note, equivalent to a conversion price of $10.28 per share, subject to adjustment upon the occurrence of certain events.

Debt issuances

Priority guaranteed senior unsecured notes—On January 17, 2020, we issued $750 million aggregate principal amount of 8.00% senior unsecured notes due February 2027 (the “8.00% Senior Notes”), and we received aggregate cash proceeds of $743 million, net of issue costs.  The 8.00% Senior Notes are fully and unconditionally guaranteed by Transocean Ltd. and certain wholly owned subsidiaries of Transocean Inc.  Such notes rank equal in right of payment to all of our existing and future unsecured unsubordinated obligations and rank structurally senior to the extent of the value of the assets of the subsidiaries guaranteeing the notes.  We may redeem all or a portion of the 8.00% Senior Notes on or prior to February 1, 2023 at a price equal to 100 percent of the aggregate principal amount plus a make-whole provision, and subsequently, at specified redemption prices.  The indenture that governs the 8.00% Senior Notes contains covenants that, among other things, limit our ability to incur certain liens on our drilling units without equally and ratably securing the notes, engage in certain sale and lease back transactions covering any of our drilling units, allow our subsidiaries to incur certain additional debt, and consolidate, merge or enter into a scheme of arrangement qualifying as an amalgamation.

Senior secured notes—On February 1, 2019, we issued $550 million aggregate principal amount of 6.875% senior secured notes due February 2027 (the “6.875% Senior Secured Notes”), and we received aggregate cash proceeds of $539 million, net of discount and issue costs.  The 6.875% Senior Secured Notes are secured by the assets and earnings associated with the ultra-deepwater floater Deepwater Poseidon and the equity of the wholly owned subsidiaries that own or operate the collateral rig.  Additionally, we were required to deposit $19 million in restricted cash accounts to satisfy debt service requirements.

On May 24, 2019, we issued $525 million aggregate principal amount of 5.375% senior secured notes due May 2023 (the “5.375% Senior Secured Notes”), and we received aggregate cash proceeds of $517 million, net of discount and issue costs.  The 5.375% Senior Secured Notes are secured by the assets and earnings associated with the ultra-deepwater floaters Transocean Endurance and Transocean Equinox and the equity of the wholly owned subsidiaries that own or operate the collateral rigs.  Additionally, we were required to deposit $14 million in restricted cash accounts to satisfy debt service.

Debt retirements

During the six months ended June 30, 2020 and 2019, we retired certain notes as a result of redemptions, tender offers and open market repurchases.  On February 18, 2020, we made a payment to redeem in full, together with a make-whole provision, our outstanding

9.00% senior notes due July 2023.  On February 5, 2019, we completed cash tender offers to purchase certain notes validly tendered.  Additionally, during the six months ended June 30, 2020 and 2019, we repurchased in the open market certain notes.  The aggregate principal amounts, cash payments and recognized gain or loss for such transactions were as follows (in millions):

	Six months ended June 30,
	2020						2019
	Redeemed		Repurchased		Total		Tendered		Repurchased		Total
6.50% Senior Notes due November 2020	$	—	$	8	$	8	$	57	$	—	$	57
6.375% Senior Notes due December 2021		—		38		38		63		15		78
3.80% Senior Notes due October 2022		—		8		8		190		3		193
5.375% Senior Secured Notes due May 2023		—		22		22		—		—		—
9.00% Senior Notes due July 2023		714		—		714		200		112		312
Aggregate principal amount retired	$	714	$	76	$	790	$	510	$	130	$	640
Aggregate cash payment	$	767	$	63	$	830	$	522	$	136	$	658
Aggregate net gain (loss)	$	(65)	$	12	$	(53)	$	(18)	$	(9)	$	(27)