Debt

12 Months Ended

Dec. 31, 2019

The following table outlines the Company's outstanding debt instruments and finance lease obligations as at December 31, 2019:



(in millions of Canadian dollars except percentages)			Maturity	Currency in which payable	2019			2018
7.250%	10-year Notes	(A)	May 2019	U.S.$	$	—		$	477
9.450%	30-year Debentures	(A)	Aug 2021	U.S.$	325			341
5.100%	10-year Medium Term Notes	(A)	Jan 2022	CDN$	125			125
4.500%	10-year Notes	(A)	Jan 2022	U.S.$	324			339
4.450%	12.5-year Notes	(A)	Mar 2023	U.S.$	454			477
2.900%	10-year Notes	(A)	Feb 2025	U.S.$	909			955
3.700%	10.5-year Notes	(A)	Feb 2026	U.S.$	324			340
4.000%	10-year Notes	(A)	Jun 2028	U.S.$	649			682
3.150%	10-year Notes	(A)	Mar 2029	CDN$	399			—
7.125%	30-year Debentures	(A)	Oct 2031	U.S.$	454			477
5.750%	30-year Debentures	(A)	Mar 2033	U.S.$	318			334
4.800%	20-year Notes	(A)	Sep 2035	U.S.$	388			408
5.950%	30-year Notes	(A)	May 2037	U.S.$	578			607
6.450%	30-year Notes	(A)	Nov 2039	CDN$	400			400
5.750%	30-year Notes	(A)	Jan 2042	U.S.$	319			336
4.800%	30-year Notes	(A)	Aug 2045	U.S.$	712			748
6.125%	100-year Notes	(A)	Sep 2115	U.S.$	1,169			1,228
8.000%	5-year Promissory Notes	(B)	up to Jun 2020	U.S.$	11			—
5.41%	Senior Secured Notes	(C)	Mar 2024	U.S.$	100			113
6.91%	Secured Equipment Notes	(D)	Oct 2024	CDN$	91			106
7.49%	Equipment Trust Certificates	(E)	Jan 2021	U.S.$	55			57
Obligations under finance leases
2.97%		(F)	Jun 2020	CDN$	3			—
6.99%		(F)	Mar 2022	U.S.$	99			104
6.57%		(F)	Dec 2026	U.S.$	45			52
12.77%		(F)	Jan 2031	CDN$	4			4
Commercial Paper				U.S.$	516			—
					8,771			8,710
Perpetual 4% Consolidated Debenture Stock		(G)		U.S.$	39			41
Perpetual 4% Consolidated Debenture Stock		(G)		G.B.£	6			6
					8,816			8,757
Unamortized fees on long-term debt					(59		)	(61		)
					8,757			8,696
Less: Long-term debt maturing within one year					599			506
					$	8,158		$	8,190

At December 31, 2019, the gross amount of long-term debt denominated in U.S. dollars was U.S. $6,016 million (2018 – U.S. $5,970 million).

Annual maturities and principal repayment requirements, excluding those pertaining to finance leases, for each of the five years following 2019 are (in millions): 2020 – $592; 2021 – $365; 2022 – $477; 2023 – $484; 2024 – $84.

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

A. These debentures and notes are presented net of unamortized discounts, pay interest semi-annually, and are unsecured but carry a negative pledge.

In 2019, the Company repaid U.S. $350 million 7.250% 10-year Notes at maturity for a total of U.S. $350 million ($471 million). The Company also issued $400 million 3.150% 10-year Notes due March 13, 2029 for net proceeds of $397 million.

In 2018, the Company repaid U.S. $275 million 6.500% 10-year Notes at maturity for a total of U.S. $275 million ($352 million) and $375 million 6.250% 10-year Medium Term Notes at maturity for a total of $375 million. The Company also issued U.S. $500 million 4.000% 10-year Notes due June 1, 2028 for net proceeds of U.S. $495 million ($638 million). In conjunction with the issuance, the Company settled a notional U.S. $500 million of forward starting floating-to-fixed interest rate swap agreements ("forward starting swaps") for a payment of U.S. $19 million ($24 million) (see Note 19). This payment was included in cash provided by operating activities consistent with the location of the related hedged item on the Company's Consolidated Statements of Cash Flows.

B. On December 30, 2019, through its business combination with CMQ Canada, the Company assumed CMQ Canada's obligations under the 8.00% 5-year Promissory Notes totalling U.S. $8 million ($11 million) owing to CMQ U.S. (see Note 11).

C. The 5.41% Senior Secured Notes are collateralized by specific locomotive units with a carrying value of $102 million at December 31, 2019. 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.

D. 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 $59 million at December 31, 2019. 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.

E. The 7.49% Equipment Trust Certificates are secured by specific locomotive units with a carrying value of $97 million at December 31, 2019. 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.

F. The carrying value of the assets collateralizing finance lease obligations was $177 million at December 31, 2019.

G. 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 14 highly rated financial institutions for a commitment amount of U.S. $1.3 billion. The facility can accommodate draws of cash and/or letters of credit at market competitive pricing. The agreement requires the Company to maintain a financial covenant in conjunction with the facility. As at December 31, 2019 and 2018, the Company was in compliance with all terms and conditions of the credit facility arrangements and satisfied the financial covenant.

Effective September 27, 2019, the Company amended and restated its revolving credit facility agreement to, among other things, increase the total amount available to U.S. $1.3 billion (December 31, 2018 – U.S. $1.0 billion). The amended and restated revolving credit facility consists of a U.S. $1.0 billion tranche maturing September 27, 2024 (extended from June 28, 2023, previously) and a U.S. $300 million tranche maturing September 27, 2021.

As at December 31, 2019 and 2018, the facility was undrawn. The amount available under the terms of the credit facility was U.S. $1.3 billion at December 31, 2019 (December 31, 2018 – U.S. $1.0 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. This commercial paper program is backed by the revolving credit facility. As at December 31, 2019, the Company had total commercial paper borrowings of U.S. $397 million ($516 million), included in "Long-term debt maturing within one year" on the Company's Consolidated Balance Sheets (December 31, 2018 – $nil). The weighted-average interest rate on these borrowings was 2.03%. The Company presents issuances and repayments of commercial paper, all of which have a maturity of less than 90 days, in the Company's Consolidated Statements of Cash Flows on a net basis.

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. Effective September 27, 2019, the Company reduced its bilateral letter of credit facilities to $300 million (December 31, 2018 – $600 million). 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, 2019, under its bilateral letter of credit facilities, the Company had no collateral posted (December 31, 2018 – $nil) and letters of credit drawn of $80 million (December 31, 2018 – $60 million) from a total available amount of $300 million (December 31, 2018 – $600 million).