NOTE 5DEBT

Debt as of June 30, 2015 and December 31, 2014, consisted of the following:

	2015			2014
	(in millions)
Revolving Credit Facility	$	590		$	360
Term Loan Facility	1,000			1,000
5% notes due 2020	1,000			1,000
5 1/2% notes due 2021	1,750			1,750
6% notes due 2024	2,250			2,250

Total debt	6,590			6,360

Less: Current maturities of long-term debt	(50		)	—
Less: Deferred financing costs	(64		)	(68		)

Total long-term debt, net	$	6,476		$	6,292

Credit Facilities

On September 24, 2014, we entered into a credit agreement with a syndicate of lenders, providing for (i) a five-year senior term loan facility (the Term Loan Facility) and (ii) a five-year senior revolving loan facility (the Revolving Credit Facility and, together with the Term Loan Facility, the Credit Facilities). All borrowings under these facilities are subject to certain customary conditions. We amended the Credit Facilities effective as of February 25, 2015, and changed certain of our covenants through December 31, 2016 or such earlier time as we elect and demonstrate compliance with our original covenants for two successive quarters (the Interim Covenant Period).

The aggregate commitments of the lenders are $2.0 billion — effectively reduced to $1.25 billion during the Interim Covenant Period — and $1.0 billion under the Revolving Credit Facility and Term Loan Facility, respectively. The Revolving Credit Facility includes a sub-limit of $400 million for the issuance of letters of credit. We will be required to repay the Term Loan Facility in $25 million quarterly installments beginning on March 31, 2016. As of June 30, 2015, we had $590 million outstanding under our Revolving Credit Facility with the ability to incur additional borrowings of up to $697 million under this facility after taking into account our cash balance.

Borrowings under the Credit Facilities bear interest, at our election, at either a LIBOR rate or an alternate base rate (ABR) (equal to the greatest of (i) the administrative agent’s prime rate, (ii) the one-month LIBOR rate plus 1.00% and (iii) the federal funds effective rate plus 0.50%), in each case plus an applicable margin. This applicable margin is based on our most recent leverage ratio and will vary from (a) in the case of LIBOR loans, 1.50% to 2.25% and (b) in the case of ABR loans, 0.50% to 1.25%. The unused portion of the Revolving Credit Facility is subject to commitment fees ranging from 0.30% to 0.50% per annum, based on our most recent leverage ratio. We also pay customary fees and expenses under the Revolving Credit Facility. Interest on ABR loans is payable quarterly in arrears. Interest on LIBOR loans is payable at the end of each LIBOR period.

All obligations under the Credit Facilities are guaranteed jointly and severally by all of our wholly-owned material subsidiaries, and will not be required to be secured so long as we maintain our credit ratings at the minimum levels defined in the Credit Facilities. During the remaining Interim Covenant Period, we would be required to grant security to our lenders if our corporate family ratings experienced a one-notch decline from Moody’s Investors Service or a two-notch decline from Standard & Poor’s Ratings Services. The assets and liabilities of subsidiaries not guaranteeing the debt are de minimis.

The Credit Facilities also require us to maintain the following financial covenants for the trailing twelve months ended as of the last day of each fiscal quarter: (a) a leverage ratio of no more than 4.50 to 1.00 except during the Interim Covenant Period when the ratio increases to 4.75 to 1.00 as of June 30, 2015, 6.25 to 1.00 as of September 30, 2015 and 8.25 to 1.00 as of December 31, 2015 and then decreases to 8.00 to 1.00 as of March 31, 2016, 7.25 to 1.00 as of June 30, 2016, 6.75 to 1.00 as of September 30, 2016, 6.25 to 1.00 as of December 31, 2016 and 4.50 to 1.00 thereafter and (b) an interest expense ratio of no less than 2.50 to 1.00 except as of December 31, 2015 when the ratio must be no less than 2.25 to 1.00. In addition, during the Interim Covenant Period, we must maintain an asset coverage ratio of no less than 1.05 to 1.00 measured as of the last day of each fiscal quarter. Finally, during the Interim Covenant Period, we must apply cash on hand in excess of $250 million to repay certain amounts outstanding under the Revolving Credit Facility. If we were to breach any of these covenants the banks would be permitted to accelerate the principal amount due under the facilities. If payment were accelerated it would result in a default under the notes.

Senior Notes

On October 1, 2014, we issued $5.00 billion in aggregate principal amount of our senior notes, including $1.00 billion of 5% senior notes due January 15, 2020 (the 2020 notes), $1.75 billion of 5 1/2% senior notes due September 15, 2021 (the 2021 notes) and $2.25 billion of 6% senior notes due November 15, 2024 (the 2024 notes and together with the 2020 notes and the 2021 notes, the notes). The notes were issued at par and are fully and unconditionally guaranteed on a senior unsecured basis by all of our material subsidiaries. We used the net proceeds from the notes to make a $4.95 billion cash distribution to Occidental in October 2014.

We pay interest on the 2020 notes semi-annually in cash in arrears on January 15 and July 15 of each year, beginning on July 15, 2015. We pay interest on the 2021 notes semi-annually in cash in arrears on March 15 and September 15 of each year, beginning on March 15, 2015. We pay interest on the 2024 notes semi-annually in cash in arrears on May 15 and November 15 of each year, beginning on May 15, 2015.

The indenture governing the notes includes covenants that, among other things, limit our and our restricted subsidiaries’ ability to incur debt secured by liens. These covenants also restrict our ability to merge or consolidate with, or transfer all or substantially all of our assets to, another entity. These covenants are subject to a number of important qualifications and limitations that are set forth in the indenture. The covenants are not, however, directly linked to measures of our financial performance. In addition, if we experience a change of control coupled with a credit rating decline, we will be required to offer to purchase the notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest or to have exercised our redemption right.

We estimate the fair value of fixed-rate debt based on prices from known market transactions for our instruments. The estimated fair value of our debt at June 30, 2015 and December 31, 2014, the fixed rate portion of which was classified as Level 1, and the variable rate portion of which approximated fair value, was approximately $5.9 billion and $5.6 billion, respectively, compared to a net carrying value of approximately $6.5 billion and $6.3 billion. A one-eighth percent change in the variable interest rates on the borrowings under our Term Loan Facility and Revolving Credit Facility on June 30, 2015, would result in an approximately $2 million change in annual interest expense.

As of June 30, 2015 and December 31, 2014, we had letters of credit in the aggregate amount of approximately $27 million and $25 million, respectively, that were issued to support ordinary course marketing and other matters.