Debt & Non-recourse Debt

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Debt & Non-recourse Debt

Note 15: Debt & Non-recourse Debt

Debt

The following table details our outstanding debt balance and its associated interest rates:

	December 31,
($ in millions)	2021			2020
Debt(1)
Senior secured credit facility, due 2028:
Term loan with a rate of 3.50%		1,297			—
Revolver with a rate of 2.11%		300			—
Senior secured credit facility, due 2023:
Term loan with a rate of 2.25%		—			177
Revolver with a rate of 2.25%		—			660
Senior notes with a rate of 6.125%, due 2024		—			300
Senior notes with a rate of 5.000%, due 2029		850			—
Senior notes with a rate of 4.875%, due 2031		500			—
Other debt		27			27
		2,974			1,164
Less: unamortized deferred financing costs and discounts(2)(3)		(61	)		(5	)
	$	2,913		$	1,159

(1)As of December 31, 2021 and 2020, weighted-average interest rates were 4.052% and 3.357% , respectively.

(2)Amount includes deferred financing costs related to our term loan and senior notes of $33 million and $22 million, respectively, as of December 31, 2021 and $1 million and $4 million, respectively, as of December 31, 2020. This amount also includes original issuance discounts of $6 million as of December 31, 2021.

(3)Amount does not include deferred financing costs of $5 and $4 million as of December 31, 2021 and 2020, respectively, relating to our revolving facility included in Other Assets in our consolidated balance sheets.

Senior Secured Credit Facilities

In March 2021, we amended our Credit Agreement to amend certain terms related to financial covenants to permit the previously announced proposed acquisition of Diamond, pursuant to that certain Agreement and Plan of Merger dated March 10, 2021. Refer to Note 3: Diamond Acquisition for further information regarding the merger. The borrowing capacity under the Credit Agreement remained the same. In connection with the amendment, we incurred $1 million in debt issuance costs. In addition, we obtained a revolving credit facility commitment in connection with the Diamond Acquisition and incurred $2 million in debt issuance costs which were amortized over the term of the commitment in the first quarter of 2021. This was included in Interest expense in our consolidated statements of operations.

In connection with the closing of the Diamond Acquisition, HGV entered into a new $1.3 billion seven-year senior secured term loan facility ("Term Loan B"). The Term Loan B was issued at a $6 million discount and the cumulative proceeds received from the Term loan and related senior notes discussed below were used to repay certain existing indebtedness of both HGV and Diamond, including HGV's pre-existing term loan and senior notes due 2024, $260 million of the balance on the revolving credit facility, and a portion of $2.03 billion of Diamond's corporate indebtedness. We incurred a $20 million loss on debt extinguishment in relation to the transactions described herein which is included in Other (loss) gain, net. During the year ended December 31, 2021, we incurred approximately $32 million in debt issuance costs for Term Loan B.

In December 2021, we amended and recast our existing revolving credit facility due in 2023 into our new senior secured credit facility due in 2028. As a part of the amendment, we also increased the capacity of the revolving credit facility from $800 million to $1 billion. Under the new credit facility, the revolver is subject to an interest rate of 2.00 percent plus one month LIBOR. Upon the execution of the recast, we refinanced the existing $300 million principal balance on the revolver due in 2023 into the new revolver due in 2028. This transaction was treated as a $300 million drawing on the revolver due in 2028 and subsequent repayment on the revolver due in 2023. During the year ended December 31, 2021, we incurred approximately $5 million in debt issuance costs in connection with the recast of the revolver.

During the year ended December 31, 2021, we repaid $363 million under the senior secured credit facilities which included payments of $360 million toward the revolver balance in addition to paying off HGV's pre-existing term loan balance of $177 million and senior notes balance of $300 million mentioned above. We also paid off $14

million of the remaining Debt. As of December 31, 2021, we had $1 million of letters of credit outstanding under the revolving credit facility and $2 million outstanding backed by cash collateral. We were in compliance with all applicable maintenance and financial covenants and ratios as of December 31, 2021.

We primarily use interest rate swaps as part of our interest rate risk management strategy for our variable-rate debt. Such interest rates swaps converted the LIBOR based variable rates on our Term Loan and Revolver to average fixed rates of 1.44 percent per annum through May 2028 and 0.53 percent per annum through November 2023, respectively, for the balance on these borrowings up to the notional values of our interest rate swaps. As of December 31, 2021, the notional values of the interest rate swaps under our term loan and revolver were $350 million and $168 million, respectively. Our interest rate swaps have been designated and qualify as cash flow hedges of interest rate risk and recorded as a liability in Accounts Payable, Accrued Expenses and Other in our consolidated balance sheets as of December 31, 2021. We characterize payments we make in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income for presentation purposes. For the year ended December 31, 2021, we recorded $2 million in accumulated other comprehensive income related to the cash flow hedges.

Senior Notes due 2029 and 2031

In June 2021, we entered into indentures in connection with the issuance and sale of senior notes, $850 million aggregate principal amount of 5.00 percent senior notes due 2029 ("the 2029 Notes") and $500 million aggregate principal amount of 4.875 percent senior notes due 2031 ("the 2031 Notes"). The net proceeds from the 2029 Notes and the 2031 Notes were used to finance the repayment of certain indebtedness in connection with the Diamond Acquisition. In connection with the senior notes issuances, we incurred $24 million in debt issuance costs.

The Senior Unsecured Notes are guaranteed on a senior unsecured basis by certain of our subsidiaries. We are in compliance with all applicable financial covenants as of December 31, 2021.

Non-recourse Debt

The following table details our outstanding non-recourse debt balance and its associated interest rates:

	December 31,
($ in millions)	2021			2020
Non-recourse debt(1)
Timeshare Facility with an average rate of 1.750%, due 2023(3)	$	131		$	—
HGV Securitized Debt with a weighted average rate of 2.711%, due 2028		70			106
HGV Securitized Debt with a weighted average rate of 3.602%, due 2032		143			202
HGV Securitized Debt with a weighted average rate of 2.431%, due 2033		151			216
HGV Securitized Debt with a weighted average rate of 3.658%, due 2039		193			251
Diamond Resorts Premium Yield Facility with an average rate of 4.766%, due 2031		8			—
Diamond Resorts Conduit Facility with an average rate of 2.250%, due 2023		125			—
Diamond Resorts Conduit Facility with an average rate of 3.000%, due 2024		8			—
Diamond Resorts Owner Trust 2017 with a weighted average rate of 3.504%, due 2029		41			—
Diamond Resorts Owner Trust 2018 with a weighted average rate of 4.061%, due 2031		92			—
Diamond Resorts Owner Trust 2019 with a weighted average rate of 3.277%, due 2032		148			—
Diamond Resorts Owner Trust 2021 with a weighted average rate of 2.160%, due 2032		224			—
		1,334			775
Less: unamortized deferred financing costs(2)		(6	)		(9	)
	$	1,328		$	766

(1)As of December 31, 2021 and 2020, weighted-average interest rates were 2.876 percent and 3.173 percent, respectively.

(2)Amount relates to Securitized Debt only and does not include deferred financing costs of $2 million and $3 million as of December 31, 2021 and 2020, respectively, relating to our Timeshare Facility included in Other Assets in our consolidated balance sheets. 

The Timeshare Facility is a non-recourse obligation with a borrowing capacity of $450 million and is payable solely from the pool of timeshare financing receivables pledged as collateral and related assets. In March 2021, we amended our Timeshare Facility to align with our amended Credit Agreement, as described above. The Premium Yield Facility is a non-recourse amortizing obligation payable solely from the pool of timeshare financing receivables pledged as collateral and related assets. We assumed the Premium Yield Facility as part of the Diamond Acquisition. In addition to these two facilities, we gained access to two additional conduit facilities, due in 2023 and 2024 respectively, as a part of our acquisition of Diamond Resorts. These facilities were issued through variable interest entities (see Note 10: Consolidated Variable Interest Entities) and have borrowing capacities of $125 million and

$150 million, respectively. Both of these facilities are non-recourse obligations with customary provisions similar to the Timeshare Facility, each of which bear a variable interest rate plus a margin and are subject to non-use fees. During the year ended December 31, 2021, we drew $125 million on the conduit facility due in 2023 and $8 million on the conduit facility due in 2024.

We are required to deposit payments received from customers on the timeshare financing receivables securing the Timeshare Facility, Premium Yield Facility and Securitized Debt into depository accounts maintained by third parties. On a monthly basis, the depository accounts are utilized to make required principal, interest and other payments due under the respective loan agreements. The balances in the depository accounts were $67 million and $29 million as of December 31, 2021 and 2020, respectively, and were included in Restricted Cash in our consolidated balance sheets.

Debt Maturities

The contractual maturities of our debt and non-recourse debt as of December 31, 2021 were as follows:

($ in millions)	Debt		Non-recourse Debt		Total
Year
2022	$	15	$	503	$	518
2023		314		528		842
2024		14		96		110
2025		13		165		178
2026		13		13		26
Thereafter		2,605		29		2,634
	$	2,974	$	1,334	$	4,308