We had the following derivative instruments recorded at fair value in our condensed consolidated balance sheets:


	As of June 30, 2023					As of December 31, 2022
	Asset Derivatives		Liability Derivatives			Asset Derivatives		Liability Derivatives
Commodity swap contracts	$	—	$	(6	)	$	—	$	(5	)
Interest rate derivatives		13		(3	)		8		(9	)
Total fair value	$	13	$	(9	)	$	8	$	(14	)
Classification:
Other current assets	$	11	$	—		$	7	$	—
Other noncurrent assets		2		—			1		—
Accrued and other current liabilities		—		(4	)		—		(3	)
Other noncurrent liabilities		—		(5	)		—		(11	)
Total fair value	$	13	$	(9	)	$	8	$	(14	)

Our derivatives are comprised of commodity and interest rate swaps. All derivatives represent Level 2 financial assets and liabilities. Our derivatives are valued using an income approach based on the observable market index prices less the contract rate multiplied by the notional amount or based on pricing models that rely on market observable inputs such as commodity prices and interest rates. Our calculation of the fair value of these financial instruments takes into consideration the risk of non-performance, including counterparty credit risk. The majority of our derivative contracts do not have a legal right of set-off. We manage the credit risk in connection with our derivatives by limiting the amount of exposure with each counterparty and monitoring the financial condition of our counterparties.

During the fourth quarter of 2022, we entered into derivative financial instruments with several large financial institutions which swapped the LIBO rate for a weighted average fixed rate of 4.120% for an aggregate notional amount of $1,000 million to hedge a portion of the interest rate exposure resulting from our U.S. term loans. These instruments are classified as cash flow hedges and mature in October 2025. In April 2023, we amended our interest rate swap agreements to replace the interest rate benchmark from LIBOR to SOFR, effective for swap payments for the period commencing April 28, 2023. Other than the foregoing, the material terms of the interest rate swap agreements remain unchanged, including the weighted average fixed rate of 4.120%, and our election to use certain practical expedients under Accounting Standards Codification Topic 848: Reference Rate Reform resulted in no material impacts on our condensed consolidated financial statements.

During the three and six months ended June 30, 2023 and 2022, we recognized an unrealized gain of $1 million, an unrealized loss of $1 million, an unrealized gain of $1 million and an unrealized gain of $6 million, respectively, in cost of sales, for our commodity swap contracts.

During the three and six months ended June 30, 2023, we recognized realized gains of $2 million and $3 million, respectively, within interest expense, net and unrealized gains of $21 million and $14 million, respectively, within other comprehensive income (loss) for our interest rate derivatives. At June 30, 2023, we expected to reclassify $8 million of gains, net of tax, from AOCL to earnings over the next twelve months. The actual amount that will be reclassified to future earnings may vary from this amount as a result of changes in market conditions.