Financing Arrangements

3 Months Ended

Jul. 31, 2020

Commercial Paper

The Company maintains commercial paper programs that allows the Company to issue U.S. dollar or Euro-denominated unsecured commercial paper notes. The aggregate amount outstanding at any time under the commercial paper programs may not exceed the equivalent of $3.5 billion. No commercial paper was outstanding at both July 31, 2020 and April 24, 2020. The issuance of commercial paper reduces the amount of credit available under the Company’s existing Credit Facility, as defined below.

Line of Credit

The Company has a $3.5 billion five-year unsecured revolving credit facility (Credit Facility), which provides back-up funding for the commercial paper programs described above. The Credit Facility includes a multi-currency borrowing feature for certain specified foreign currencies. At July 31, 2020 and April 24, 2020, no amounts were outstanding under the Credit Facility.

Interest rates on advances on the Credit Facility are determined by a pricing matrix, based on the Company’s long-term debt ratings, assigned by Standard & Poor’s Ratings Services and Moody’s Investors Service. Facility fees are payable on the Credit Facility and are determined in the same manner as the interest rates. The agreement also contains customary covenants, all of which the Company was in compliance with at July 31, 2020.

Debt Obligations

The Company's debt obligations consisted of the following:


(in millions)	Maturity by Fiscal Year	July 31, 2020		April 24, 2020
Current debt obligations	2021	$	5,823	$	2,776

Long-term debt
3.150 percent seven-year 2015 senior notes	2022	1,534		1,534
3.200 percent ten-year 2012 senior notes	2023	650		650
0.375 percent four-year 2019 senior notes	2023	1,762		1,631
2.750 percent ten-year 2013 senior notes	2023	530		530
0.000 percent four-year 2019 senior notes	2023	881		815
2.950 percent ten-year 2013 senior notes	2024	310		310
3.625 percent ten-year 2014 senior notes	2024	432		432
3.500 percent ten-year 2015 senior notes	2025	2,700		2,700
0.250 percent seven-year 2019 senior notes	2026	1,175		1,087
1.125 percent eight-year 2019 senior notes	2027	1,762		1,631
3.350 percent ten-year 2017 senior notes	2027	368		368
1.625 percent twelve-year 2019 senior notes	2031	1,175		1,087
1.000 percent thirteen-year 2019 senior notes	2032	1,175		1,087
4.375 percent twenty-year 2015 senior notes	2035	1,932		1,932
6.550 percent thirty-year 2007 senior notes	2038	253		253
2.250 percent twenty-year 2019 senior notes	2039	1,175		1,087
6.500 percent thirty-year 2009 senior notes	2039	158		158
5.550 percent thirty-year 2010 senior notes	2040	224		224
1.500 percent twenty-year 2019 senior notes	2040	1,175		1,087
4.500 percent thirty-year 2012 senior notes	2042	105		105
4.000 percent thirty-year 2013 senior notes	2043	305		305
4.625 percent thirty-year 2014 senior notes	2044	127		127
4.625 percent thirty-year 2015 senior notes	2045	1,813		1,813
1.750 percent thirty-year 2019 senior notes	2050	1,175		1,087
Bank borrowings	2022	39		55
Debt discount, net	2021 - 2020	(14)		(15)
Finance lease obligations	2022 - 2035	45		45
Deferred financing costs	2021 - 2050	(99)		(104)
Long-term debt		$	22,867	$	22,021

Senior Notes

The Company has outstanding unsecured senior obligations, described as senior notes in the tables above (collectively, the Senior Notes). The Senior Notes rank equally with all other unsecured and unsubordinated indebtedness of the Company. The indentures under which the Senior Notes were issued contain customary covenants, all of which the Company remained in compliance with at July 31, 2020.

In June 2019, Medtronic Luxco issued six tranches of Euro-denominated Senior Notes with an aggregate principal of €5.0 billion, with maturities ranging from fiscal year 2021 to fiscal year 2050, resulting in cash proceeds of approximately $5.6 billion, net of discounts and issuance costs. The Company used the net proceeds of the offering to fund the cash tender offer and early redemption, described below. The Euro-denominated debt is designated as a net investment hedge of certain of the Company's European operations. Refer to Note 8 for additional information regarding the net investment hedge.

The Company completed the cash tender offer of $4.6 billion of Medtronic Inc., CIFSA, and Medtronic Luxco Senior Notes for $5.0 billion of total consideration in July 2019. The Company recognized a loss on debt extinguishment of $413 million during the first quarter of fiscal year 2020, which primarily included cash premiums and accelerated amortization of deferred financing costs and debt discounts and premiums. The loss was recognized in interest expense in the consolidated statement of income for the three months ended July 26, 2019.

Term Loan Agreements

On May 12, 2020, Medtronic Luxco entered into a term loan agreement (Loan Agreement) by and among Medtronic Luxco, Medtronic plc, Medtronic, Inc., and Mizuho Bank, Ltd. as administrative agent and as lender. The Loan Agreement provides an unsecured term loan in an aggregate principal amount of up to ¥300 billion, or approximately $2.8 billion, with a term of six months, which may be extended for an additional six months at Medtronic Luxco’s option. On May 13, 2020, Medtronic Luxco borrowed the entire amount of the term loan under the Loan Agreement. Borrowings under the Loan Agreement will bear interest at the TIBOR Rate (as defined in the Loan Agreement) plus a margin of 0.50% per annum. Medtronic plc and Medtronic, Inc. have guaranteed the obligations of Medtronic Luxco under the Loan Agreement. The Japanese Yen-denominated debt is designated as a net investment hedge of certain of our Japanese operations.

Financial Instruments Not Measured at Fair Value

At July 31, 2020, the estimated fair value of the Company’s Senior Notes was $28.9 billion compared to a principal value of $25.5 billion. At April 24, 2020, the estimated fair value was $27.1 billion compared to a principal value of $24.5 billion. The fair value was estimated using quoted market prices for the publicly registered Senior Notes, which are classified as Level 2 within the fair value hierarchy. The fair values and principal values consider the terms of the related debt and exclude the impacts of debt discounts and hedging activity.