Debt & Non-recourse Debt

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Debt & Non-recourse Debt

Note 13: Debt & Non-recourse Debt

Debt

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

	March 31,			December 31,
($ in millions)	2022			2021
Debt(1)
Senior secured credit facility
Term loan with a rate of 3.50%, due 2028	$	1,294		$	1,297
Revolver with a rate of 2.47%, due 2026		300			300
Senior notes with a rate of 5.000%, due 2029		850			850
Senior notes with a rate of 4.875%, due 2031		500			500
Other debt		28			27
		2,972			2,974
Less: unamortized deferred financing costs and discounts(2)(3)		(59	)		(61	)
	$	2,913		$	2,913

(1) As of March 31, 2022 and December 31, 2021, weighted-average interest rates were 4.088% and 4.052%, respectively.

(2) Amount includes unamortized deferred financing costs related to our term loan and senior notes of $31 million and $22 million, respectively, as of March 31, 2022 and $33 million and $22 million, respectively, as of December 31, 2021. This amount also includes unamortized original issuance discounts of $6 million as of March 31, 2022 and December 31, 2021.

(3) Amount does not include unamortized deferred financing costs of $5 million as of March 31, 2022 and December 31, 2021 related to our revolving facility which are included in Other assets in our unaudited condensed consolidated balance sheets.

Senior secured credit facilities

During the three months ended March 31, 2022, we repaid $3 million under the senior secured credit facilities. As of March 31, 2022, 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 March 31, 2022.

We primarily use interest rate swaps as part of our interest rate risk management strategy for our variable-rate debt. Such interest rate swaps converted the LIBOR based variable rates on our Revolver and Term Loan to average fixed rates of 0.53 percent per annum with maturities in 2023 and 1.58 percent with maturities between 2023 and 2028, respectively, for the balance on these borrowings up to the notional values of our interest rate swaps. As of March 31, 2022, the notional values of the interest rate swaps under our Revolver and Term Loan were $165 million and $550 million, respectively. Our interest rate swaps have been designated and qualify as cash flow hedges of interest rate risk and recorded at their estimated fair value as an asset in Other assets in our unaudited condensed consolidated balance sheets. As of March 31, 2022 and December 31, 2021, the estimated fair value of our cash flow hedges are $32 million and $2 million, respectively. 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. The following table reflects the activity in accumulated other comprehensive income related to our derivative instruments during the three months ended March 31, 2022.

	Net unrealized gain on derivative instruments
Balance as of December 31, 2021	$	2
Other comprehensive income before reclassifications, net		21
Reclassification to net income		1
Balance as of March 31, 2022	$	24

Non-recourse Debt

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

	March 31,			December 31,
($ in millions)	2022			2021
Non-recourse debt(1)
Timeshare Facility with an average rate of 2.20%, due 2023(3)	$	161		$	131
HGV Securitized Debt with a weighted average rate of 2.711%, due 2028		62			70
HGV Securitized Debt with a weighted average rate of 3.602%, due 2032		131			143
HGV Securitized Debt with a weighted average rate of 2.431%, due 2033		136			151
HGV Securitized Debt with a weighted average rate of 3.658%, due 2039		180			193
Diamond Resorts Premium Yield Facility with an average rate of 4.766%, due 2031		7			8
Diamond Resorts Conduit Facility with an average rate of 2.250%, due 2023		125			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		81			92
Diamond Resorts Owner Trust 2019 with a weighted average rate of 3.277%, due 2032		127			148
Diamond Resorts Owner Trust 2021 with a weighted average rate of 2.160%, due 2032		198			224
		1,208			1,334
Less: unamortized deferred financing costs(2)		(5	)		(6	)
	$	1,203		$	1,328

(1) As of March 31, 2022 and December 31, 2021, weighted-average interest rates were 2.873% and 2.876%, respectively.

(2) Amount relates to Securitized Debt only and does not include unamortized deferred financing costs of $2 million and $2 million as of March 31, 2022 and December 31, 2021, respectively, relating to our Timeshare Facility included in Other Assets in our unaudited condensed consolidated balance sheets.

(3) In connection with the amendment to the Timeshare Facility executed in August 2020, the revolving commitment period of the Timeshare Facility

terminates in August 2022, however the repayment maturity date extends 12 months beyond the commitment termination date to August 2023.

The Timeshare Facility and Premium Yield Facility are non-recourse obligations payable solely from the pool of timeshare financing receivables pledged as collateral and related assets. The Timeshare Facility has a borrowing capacity of $450 million. Furthermore, we have access to two additional conduit facilities which 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. The conduit facilities are due in 2023 and 2024 and have a borrowing capacity of $125 million and $150 million, respectively. These conduit facilities were issued through variable interest entities. See Note 10: Consolidated Variable Interest Entities for more information.

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 $66 million and $67 million as of March 31, 2022 and December 31, 2021, respectively, and were included in Restricted cash in our unaudited condensed consolidated balance sheets.

Debt Maturities

The contractual maturities of our debt and non-recourse debt as of March 31, 2022 were as follows:

($ in millions)	Debt		Non-recourse Debt		Total
Year
2022 (remaining)	$	12	$	355	$	367
2023		15		562		577
2024		14		88		102
2025		13		138		151
2026		313		38		351
Thereafter		2,605		27		2,632
	$	2,972	$	1,208	$	4,180