Borrowings

Borrowings consist of the following (all amounts are presented in millions of U.S. dollars and debt issuances are denominated in U.S. dollars, unless otherwise noted)



	May 31, 2017		August 31, 2016
Short-term borrowings ¹
$6 Billion note issuance ^2,3
1.750% unsecured notes due 2018	$	1,248	$	—
2.600% unsecured notes due 2021	1,494		—
3.100% unsecured notes due 2023	745		—
$8 Billion note issuance ^2,3
1.750% unsecured notes due November 2017	749		—
Unsecured Pound Sterling variable rate term loan due 2019	105		63
Other ⁴	497		260
Total short-term borrowings	$	4,838	$	323

Long-term debt ¹
Unsecured Pound Sterling variable rate term loan due 2019	$	1,736	$	1,833
$6 Billion note issuance ^2,3
1.750% unsecured notes due 2018	—		1,246
2.600% unsecured notes due 2021	—		1,493
3.100% unsecured notes due 2023	—		744
3.450% unsecured notes due 2026	1,886		1,885
4.650% unsecured notes due 2046	590		590
$8 Billion note issuance ^2,3
1.750% unsecured notes due 2017	—		746
2.700% unsecured notes due 2019	1,246		1,244
3.300% unsecured notes due 2021	1,243		1,242
3.800% unsecured notes due 2024	1,988		1,987
4.500% unsecured notes due 2034	495		494
4.800% unsecured notes due 2044	1,492		1,492
£700 Million note issuance ^2,3
2.875% unsecured Pound Sterling notes due 2020	513		521
3.600% unsecured Pound Sterling notes due 2025	384		391
€750 Million note issuance ^2,3
2.125% unsecured Euro notes due 2026	838		830
$4 Billion note issuance ^3,7
3.100% unsecured notes due 2022	1,194		1,194
4.400% unsecured notes due 2042	492		492
$1 Billion note issuance ^3,7
5.250% unsecured notes due 2019 ⁵	250		249
Other ⁶	25		32
Total long-term debt, less current portion	$	14,372	$	18,705


¹	Carry values are presented net of unamortized discount and debt issuance costs, where applicable, and foreign currency denominated borrowings have been translated using the spot rates at May 31, 2017 and August 31, 2016, respectively.


²	Notes are unsubordinated debt obligations of Walgreens Boots Alliance and rank equally in right of payment with all other unsecured and unsubordinated indebtedness of Walgreens Boots Alliance from time to time outstanding.

The fair value and carrying value of the $6 billion, $8 billion, £0.7 billion, €0.75 billion, $4 billion and $1 billion note issuances as of May 31, 2017 was $6.1 billion and $6.0 billion, $7.5 billion and $7.2 billion, $1.0 billion and $0.9 billion, $0.9 billion and $0.8 billion, $1.7 billion and $1.7 billion, and $0.3 billion and $0.3 billion, respectively. The fair values of the notes outstanding are level 1 fair value measures and determined based on quoted market price and translated at the May 31, 2017 spot rate, as applicable.


⁴	Other short-term borrowings represent a mix of fixed and variable rate borrowings with various maturities and working capital facilities denominated in various currencies.


⁵	Includes interest rate swap fair market value adjustments. See note 9, Fair value measurements for additional fair value disclosures.


⁶	Other long-term debt represents a mix of fixed and variable rate borrowings in various currencies with various maturities.

⁷

Notes are senior debt obligations of Walgreens and rank equally with all other unsecured and unsubordinated indebtedness of Walgreens. On December 31, 2014, Walgreens Boots Alliance fully and unconditionally guaranteed the outstanding notes on an unsecured and unsubordinated basis. The guarantee, for so long as it is in place, is an unsecured, unsubordinated debt obligation of Walgreens Boots Alliance and will rank equally in right of payment with all other unsecured and unsubordinated indebtedness of Walgreens Boots Alliance.

2017 Term Loan Credit Agreements

On February 22, 2017, the Company entered into (a) a $4.8 billion unsecured term loan facility with the lenders party thereto (the “Syndicated Credit Agreement”) and (b) a $1.0 billion unsecured term loan facility with Sumitomo Mitsui Banking Corporation, as lender and administrative agent (the “Sumitomo Credit Agreement” and, together with the Syndicated Credit Agreement, the “2017 Term Loan Credit Agreements”). The obligations of the lenders party to each of the 2017 Term Loan Credit Agreements to fund the loans thereunder were to become effective upon the date of closing of the transactions contemplated by the Merger Agreement. Each of the 2017 Term Loan Credit Agreements and the commitments contemplated thereby terminated on June 28, 2017 upon the termination of the Merger Agreement. See note 1, Basis of presentation. As of May 31, 2017, there were no borrowings under either of the 2017 Term Loan Credit Agreements.

2017 Revolving Credit Agreement

On February 1, 2017, the Company entered into a $1.0 billion revolving credit facility (the “2017 Revolving Credit Agreement”) with the lenders from time to time party thereto. The Company will be the borrower under the 2017 Revolving Credit Agreement, which terminates on the earlier of (a) 364 days following the effective date thereof, subject to the extension thereof pursuant to provisions specified in the Revolving Credit Agreement, and (b) the date of termination in whole of the aggregate commitment pursuant to the Revolving Credit Agreement. The ability of the Company to request the making of loans under the 2017 Revolving Credit Agreement is subject to the satisfaction (or waiver) of certain customary conditions set forth therein. As of May 31, 2017, there were no borrowings under the 2017 Revolving Credit Agreement.

$6.0 billion note issuance

On June 1, 2016, Walgreens Boots Alliance received net proceeds (after deducting underwriting discounts and offering expenses) of $6.0 billion from a public offering of five series of U.S. dollar notes: $1.2 billion of 1.750% notes due 2018 (the “2018 notes”), $1.5 billion of 2.600% notes due 2021 (the “2021 notes”), $0.8 billion of 3.100% notes due 2023 (the “2023 notes”), $1.9 billion of 3.450% notes due 2026 (the “2026 notes”) and $0.6 billion of 4.650% notes due 2046 (the “2046 notes”). Total issuance costs relating to the notes, including underwriting discounts and offering expenses, were $30 million. The notes contain redemption terms which allow or require the Company to redeem the notes at defined redemption prices plus accrued and unpaid interest at redemption dates set forth in the applicable series of notes. Interest on the notes issued on June 1, 2016 is payable semi-annually. Because the merger with Rite Aid was not consummated on or prior to June 1, 2017, the 2018 notes, the 2021 notes and the 2023 notes (but not the 2026 notes or 2046 notes, which remain outstanding in accordance with their respective terms) were redeemed on June 5, 2017 under the special mandatory redemption terms of the indenture governing such notes. Walgreens Boots Alliance was required to redeem all of the 2018 notes, the 2021 notes and the 2023 notes then outstanding, at a special mandatory redemption price equal to 101% of the aggregate principal amount of such notes, plus accrued and unpaid interest of approximately $1 million to, but excluding, the date of redemption. Accordingly, the 2018 notes, the 2021 notes and the 2023 notes were classified as Short-term borrowings on the Consolidated Condensed Balance Sheet as of May 31, 2017.

Debt covenants

The Company’s credit facilities contain a covenant to maintain, as of the last day of each fiscal quarter, a ratio of consolidated debt to total capitalization not to exceed 0.60:1.00. The credit facilities contain various other customary covenants.

Other borrowings

The Company periodically borrows under its commercial paper program. There were no commercial paper borrowings outstanding as of May 31, 2017 or August 31, 2016, respectively. The Company had no activity under its commercial paper program for the nine months ended May 31, 2017. The Company had average daily short-term borrowings of $18 million of commercial paper outstanding at a weighted average interest rate of 0.66% for the nine month period ended May 31, 2016.