Debt & Non-recourse Debt

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Debt & Non-recourse Debt

Debt & Non-recourse Debt

Debt

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

($ in millions)	March 31, 2023		December 31, 2022
Debt(1)
Senior secured credit facility
Term loan with a rate of 7.840%, due 2028	$	1,281	$	1,284
Revolver with a rate of 6.697%, due 2026	328		40
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	31		29
Total debt, gross	2,990		2,703
Less: unamortized deferred financing costs and discounts(2)(3)	(50)		(52)
Total debt, net	$	2,940	$	2,651

(1)As of March 31, 2023 and December 31, 2022, weighted-average interest rates were 6.396% and 6.143%, respectively.

(2)Amount includes unamortized deferred financing costs related to our term loan and senior notes of $25 million and $19 million, respectively, as of March 31, 2023 and $26 million and $19 million, respectively, as of December 31, 2022. This amount also includes unamortized original issuance discounts of $6 million and $7 million as of March 31, 2023 and December 31, 2022, respectively.

(3)Amount does not include unamortized deferred financing costs of $4 million as of March 31, 2023 and December 31, 2022, respectively, related to our revolving facility which are included in Other assets in our condensed consolidated balance sheets.

Senior secured credit facilities

As of March 31, 2023, we had $1 million of letters of credit outstanding under the revolving credit facility and $1 million outstanding backed by cash collateral. We were in compliance with all applicable maintenance and financial covenants and ratios as of March 31, 2023. As of March 31, 2023, we have $671 million remaining borrowing capacity under the revolver facility.

We primarily use interest rate swaps as part of our interest rate risk management strategy for our variable-rate debt. These interest rate swaps are associated with the remaining available LIBOR based senior secured credit facility. Therefore, as of March 31, 2023, these interest rate swaps convert the LIBOR based variable rate on our Term Loan to average fixed rates of 1.32% per annum with maturities between 2023 and 2028, for the balance on this borrowing up to the notional values of our interest rate swaps. As of March 31, 2023, the notional values of the interest rate swaps under our Term Loan was $705 million. 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 condensed consolidated balance sheets. As of March 31, 2023 and December 31, 2022, the estimated fair value of our cash flow hedges are $51 million and $63 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, 2023.

	Net unrealized gain on derivative instruments
Balance as of December 31, 2022	$	48
Other comprehensive income before reclassifications, net	(6)
Reclassification to net income	(4)
Balance as of March 31, 2023	$	38

Senior Notes due 2029 and 2031

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 March 31, 2023.

Non-recourse Debt

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

($ in millions)	March 31, 2023		December 31, 2022
Non-recourse debt(1)
Timeshare Facility with an average rate of 5.890%, due 2025(3)	$	175	$	98
HGV Securitized Debt with a weighted average rate of 2.711%, due 2028	37		42
HGV Securitized Debt with a weighted average rate of 3.602%, due 2032	89		98
HGV Securitized Debt with a weighted average rate of 2.431%, due 2033	92		101
HGV Securitized Debt with a weighted average rate of 4.304%, due 2034	152		168
HGV Securitized Debt with a weighted average rate of 4.826%, due 2037	242		251
HGV Securitized Debt with a weighted average rate of 3.658%, due 2039	122		134
Diamond Resorts Owner Trust 2019 with a weighted average rate of 3.255%, due 2032	77		87
Diamond Resorts Owner Trust 2021 with a weighted average rate of 2.160%, due 2033	119		134
Total non-recourse debt, gross	1,105		1,113
Less: unamortized deferred financing costs(2)	(10)		(11)
Total non-recourse debt, net	$	1,095	$	1,102

(1)As of March 31, 2023 and December 31, 2022, weighted-average interest rates were 4.026% and 3.539%, respectively.

(2)Amount relates to securitized debt only and does not include unamortized deferred financing costs of $4 million as of March 31, 2023 and December 31, 2022, respectively, relating to our Timeshare Facility included in Other Assets in our condensed consolidated balance sheets.

(3)In connection with the amended and restated Timeshare Facility executed in May 2022, the revolving commitment period of the Timeshare Facility terminates in May 2024, however the repayment maturity date extends 12 months beyond the commitment termination date to May 2025.

The Timeshare Facility is a non-recourse obligation payable solely from the pool of timeshare financing receivables pledged as collateral and related assets. As of March 31, 2023, our Timeshare Facility has a remaining borrowing capacity of $575 million.

We are required to deposit payments received from customers on the timeshare financing receivables securing the Timeshare 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 $50 million as of March 31, 2023 and December 31, 2022, respectively, and were included in Restricted cash in our condensed consolidated balance sheets.

Debt Maturities

The contractual maturities of our debt and non-recourse debt as of March 31, 2023 were as follows:

($ in millions)	Debt		Non-recourse Debt		Total
Year
2023 (remaining nine months)	$	13	$	196	$	209
2024	16		215		231
2025	15		333		348
2026	342		126		468
2027	13		91		104
Thereafter	2,591		144		2,735
Total	$	2,990	$	1,105	$	4,095