Debt

12 Months Ended

Dec. 31, 2017



(in millions of Canadian dollars except percentages)			Maturity	Currency in which payable	2017		2016
6.500%	10-year Notes	(A)	May 2018	U.S.$	$	345	$	369
6.250%	10-year Medium Term Notes	(A)	Jun 2018	CDN$	375		375
7.250%	10-year Notes	(A)	May 2019	U.S.$	439		469
9.450%	30-year Debentures	(A)	Aug 2021	U.S.$	314		336
5.100%	10-year Medium Term Notes	(A)	Jan 2022	CDN$	125		125
4.500%	10-year Notes	(A)	Jan 2022	U.S.$	311		333
4.450%	12.5-year Notes	(A)	Mar 2023	U.S.$	438		469
2.900%	10-year Notes	(A)	Feb 2025	U.S.$	878		940
3.700%	10.5-year Notes	(A)	Feb 2026	U.S.$	313		335
7.125%	30-year Debentures	(A)	Oct 2031	U.S.$	439		470
5.750%	30-year Debentures	(A)	Mar 2033	U.S.$	307		328
4.800%	20-year Notes	(A)	Sep 2035	U.S.$	375		401
5.950%	30-year Notes	(A)	May 2037	U.S.$	558		597
6.450%	30-year Notes	(A)	Nov 2039	CDN$	400		400
5.750%	30-year Notes	(A)	Jan 2042	U.S.$	308		330
4.800%	30-year Notes	(A)	Aug 2045	U.S.$	687		736
6.125%	100-year Notes	(A)	Sep 2115	U.S.$	1,129		1,208
5.41%	Senior Secured Notes	(B)	Mar 2024	U.S.$	111		126
6.91%	Secured Equipment Notes	(C)	Oct 2024	CDN$	120		133
7.49%	Equipment Trust Certificates	(D)	Jan 2021	U.S.$	52		56
Obligations under capital leases
6.57% – 6.99%		(E)	2022 – 2026	U.S.$	148		163
12.77%		(E)	Jan 2031	CDN$	3		3
					8,175		8,702
Perpetual 4% Consolidated Debenture Stock		(F)		U.S.$	38		41
Perpetual 4% Consolidated Debenture Stock		(F)		G.B.£	6		6
					8,219		8,749
Less: Unamortized fees on long-term debt					60		65
					8,159		8,684
Less: Long-term debt maturing within one year					746		25
					$	7,413	$	8,659

At December 31, 2017, the gross amount of long-term debt denominated in U.S. dollars was U.S. $5,755 million (2016 – U.S. $5,763 million).

Annual maturities and principal repayment requirements, excluding those pertaining to capital leases, for each of the five years following 2017 are (in millions): 2018 – $742; 2019 – $462; 2020 – $63; 2021 – $353; 2022 – $466.

Fees on long-term debt are amortized to income over the term of the related debt.

A. These debentures and notes pay interest semi-annually and are unsecured, but carry a negative pledge.

B. The 5.41% Senior Secured Notes are collateralized by specific locomotive units with a carrying value of $118 million at December 31, 2017. The Company pays equal blended semi-annual payments of principal and interest. Final repayment of the remaining principal of U.S. $44 million is due in March 2024.

C. The 6.91% Secured Equipment Notes are full recourse obligations of the Company collateralized by a first charge on specific locomotive units with a carrying value of $107 million at December 31, 2017. The Company pays equal blended semi-annual payments of principal and interest. Final repayment of the remaining principal of $11 million is due in October 2024.

D. The 7.49% Equipment Trust Certificates are secured by specific locomotive units with a carrying value of $104 million at December 31, 2017. The Company makes semi-annual payments that vary in amount and are interest-only payments or blended principal and interest payments. Final repayment of the remaining principal of U.S. $11 million is due in January 2021.

E. At December 31, 2017, capital lease obligations included in long-term debt were as follows:



(in millions of Canadian dollars)	Year	Capital leases
Minimum lease payments in:
	2018	$	15
	2019	15
	2020	15
	2021	15
	2022	105
	Thereafter	37
Total minimum lease payments		202
Less: Imputed interest		(51		)
Present value of minimum lease payments		151
Less: Current portion		(4		)
Long-term portion of capital lease obligations		$	147

During the years ended 2017, 2016, and 2015, the Company had no additions to property, plant and equipment under capital lease obligations.

The carrying value of the assets collateralizing the capital lease obligations was $196 million at December 31, 2017.

F. The Consolidated Debenture Stock, authorized by an Act of Parliament of 1889, constitutes a first charge upon and over the whole of the undertaking, railways, works, rolling stock, plant, property and effects of the Company, with certain exceptions.

Credit facility

CP has a revolving credit facility (the “facility”) agreement with 16 highly rated financial institutions for a commitment amount of U.S. $2.0 billion. The facility includes a U.S. $1.0 billion one-year plus one-year term-out portion and a U.S. $1.0 billion five-year portion. The facility can accommodate draws of cash and/or letters of credit at market competitive pricing. The agreement requires the Company not to exceed a maximum debt to earnings before interest, tax, depreciation, and amortization ratio. As at December 31, 2017 and 2016, the Company was in compliance with all terms and conditions of the credit facility arrangements and satisfied the threshold stipulated in this financial covenant.

Effective June 23, 2017, the Company extended the maturity date by one year on its existing revolving U.S. $2.0 billion credit facility, which includes a U.S. $1.0 billion five-year portion and U.S. $1.0 billion one-year plus one-year term-out portion. The maturity date on the first U.S. $1.0 billion tranche was extended to June 27, 2019; the maturity date on the second U.S. $1.0 billion tranche was extended to June 28, 2022.

As at December 31, 2017 and 2016, the facility was undrawn. The amount available under the terms of the credit facility was U.S. $2.0 billion at December 31, 2017 (December 31, 2016 – U.S. $2.0 billion).

The Company also has a commercial paper program which enables it to issue commercial paper up to a maximum aggregate principal amount of U.S. $1.0 billion in the form of unsecured promissory notes. The commercial paper program is backed by the U.S. $1.0 billion one-year plus one-year term-out portion of the revolving credit facility. As at December 31, 2017, the Company had no commercial paper borrowings outstanding (December 31, 2016 – $nil).

CP has bilateral letter of credit facilities with six highly rated financial institutions to support its requirement to post letters of credit in the ordinary course of business. Under these agreements, the Company has the option to post collateral in the form of cash or cash equivalents, equal at least to the face value of the letter of credit issued. These agreements permit CP to withdraw amounts posted as collateral at any time; therefore, the amounts posted as collateral are presented as “Cash and cash equivalents” on the Company’s Consolidated Balance Sheets. As at December 31, 2017, the Company had $150 million posted as collateral on its bilateral letters of credit facility (December 31, 2016 – $nil). At December 31, 2017, under its bilateral facilities the Company had letters of credit drawn of $319 million (December 31, 2016 – $320 million) from a total available amount of $600 million (December 31, 2016 – $600 million).