Debt

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Debt

Debt

The following table outlines the Company's outstanding long-term debt as at December 31, 2021:

(in millions of Canadian dollars except percentages)			Maturity	Currency in which payable	2021	2020
9.450%	30-year Debentures	(A)	Aug 2021	U.S.$	—	318
5.100%	10-year Medium Term Notes	(A)	Jan 2022	CDN$	125	125
4.500%	10-year Notes	(A)	Jan 2022	U.S.$	317	318
4.450%	12.5-year Notes	(A)	Mar 2023	U.S.$	444	445
1.589%	2-year Notes	(A)	Nov 2023	CDN$	1,000	—
1.350%	3-year Notes	(A)	Dec 2024	U.S.$	1,899	—
2.900%	10-year Notes	(A)	Feb 2025	U.S.$	887	891
3.700%	10.5-year Notes	(A)	Feb 2026	U.S.$	317	318
1.750%	5-year Notes	(A)	Dec 2026	U.S.$	1,266	—
2.540%	6.3-year Notes	(A)	Feb 2028	CDN$	1,200	—
4.000%	10-year Notes	(A)	Jun 2028	U.S.$	634	636
3.150%	10-year Notes	(A)	Mar 2029	CDN$	399	399
2.050%	10-year Notes	(A)	Mar 2030	U.S.$	633	636
7.125%	30-year Debentures	(A)	Oct 2031	U.S.$	444	446
2.450%	10-year Notes	(A)	Dec 2031	U.S.$	1,774	—
5.750%	30-year Debentures	(A)	Mar 2033	U.S.$	311	312
4.800%	20-year Notes	(A)	Sep 2035	U.S.$	379	381
5.950%	30-year Notes	(A)	May 2037	U.S.$	564	567
6.450%	30-year Notes	(A)	Nov 2039	CDN$	400	400
3.000%	20-year Notes	(A)	Dec 2041	U.S.$	1,261	—

5.750%	30-year Notes	(A)	Jan 2042	U.S.$	312		313
4.800%	30-year Notes	(A)	Aug 2045	U.S.$	695		698
3.050%	30-year Notes	(A)	Mar 2050	CDN$	298		298
3.100%	30-year Notes	(A)	Dec 2051	U.S.$	2,266		—
6.125%	100-year Notes	(A)	Sep 2115	U.S.$	1,141		1,146
5.41%	Senior Secured Notes	(B)	Mar 2024	U.S.$	80		89
6.91%	Secured Equipment Notes	(C)	Oct 2024	CDN$	58		75
7.49%	Equipment Trust Certificates		Jan 2021	U.S.$	—		14
Obligations under finance leases
1.99% - 4.13%		(D)	2022 - 2024	CDN$/U.S.$	2		4
6.99%		(D)	Mar 2022	U.S.$	97		97
6.57%		(D)	Dec 2026	U.S.$	33		38
12.77%		(D)	Jan 2031	CDN$	4		4
1.93%		(D)	Feb 2041	U.S.$	4		—
Commercial Paper			up to Jan 2022	U.S.$	336		820
Term Credit Facility			Mar 2022	U.S.$	634		—
Demand Promissory Note				CDN$	6		—
					20,220		9,788
Perpetual 4% Consolidated Debenture Stock		(E)		U.S.$	38		39
Perpetual 4% Consolidated Debenture Stock		(E)		G.B.£	6		6
					20,264		9,833
Unamortized fees on long-term debt					(137)		(62)
					20,127		9,771
Less: Long-term debt maturing within one year					1,550		1,186
					$	18,577	$	8,585

At December 31, 2021, the gross amount of long-term debt denominated in U.S. dollars was U.S. $13,265 million (2020 – U.S. $6,713 million).

Annual maturities and principal repayment requirements, excluding those pertaining to finance leases, for each of the five years following 2021 are (in millions): 2022 – $1,446; 2023 – $1,473; 2024 – $1,984; 2025 – $888; 2026 – $1,585.

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.

During the fourth quarter of 2021, the Company issued the following securities for total net proceeds of $10.7 billion to fund the cash consideration component of the KCS acquisition:

Date Issued	Description of Securities	Maturity	Net Proceeds
November 24, 2021	$1.0 billion 1.589% Notes	Nov 2023	$1.00 billion
	$1.2 billion 2.540% Notes	Feb 2028	$1.20 billion
December 2, 2021	U.S. $1.5 billion 1.350% Notes	Dec 2024	$1.91 billion (U.S. $1.49 billion)
	U.S. $1.0 billion 1.750% Notes	Dec 2026	$1.27 billion (U.S. $0.99 billion)
	U.S. $1.4 billion 2.450% Notes	Dec 2031	$1.78 billion (U.S. $1.39 billion)
	U.S. $1.0 billion 3.000% Notes	Dec 2041	$1.26 billion (U.S. $0.99 billion)
	U.S. $1.8 billion 3.100% Notes	Dec 2051	$2.26 billion (U.S. $1.77 billion)

The U.S. $1.4 billion 2.450% Notes and the U.S. $1.0 billion 3.000% Notes include a special mandatory redemption provision which provides that if STB final approval of CP's application to control KCS is not received prior to March 25, 2023 or, if in the Company's judgment, STB final approval will not be sought or received by this date, the Company will be required to redeem all of such outstanding notes at a price equal to 101% of the aggregate principal amount of the applicable notes plus accrued and unpaid interest.

In conjunction with the above debt issuances, the Company cash settled a notional $600 million of interest rate bond locks and a notional U.S. $2.4 billion of forward starting floating-to-fixed interest rate swap agreements ("forward starting swaps") for a payment of $226 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.

During the third quarter of 2021, the Company also repaid U.S. $250 million 9.450% 30-year debentures at maturity for a total of U.S. $250 million ($312 million).

In 2020, the Company issued U.S $500 million 2.050% 10-year notes due March 5, 2030 for net proceeds of U.S. $495 million ($662 million) and $300 million 3.050% 30-year notes due March 9, 2050 for net proceeds of $296 million.

B.  The 5.41% senior secured notes are collateralized by specific locomotive units with a carrying value of $92 million at December 31, 2021. 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 $34 million at December 31, 2021. 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 carrying value of the assets collateralizing finance lease obligations was $166 million at December 31, 2021.

E.  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. Effective September 24, 2021, the Company extended the maturity dates of the U.S. $1.0 billion tranche to September 27, 2026 and the U.S. $300 million tranche to September 27, 2023. During 2021, the Company amended the financial covenant within the facility agreement to provide flexibility upon closing of the KCS acquisition. As at December 31, 2021 and 2020, the Company was in compliance with all terms and conditions of the credit facility arrangements and satisfied the financial covenant. As at December 31, 2021 and 2020, the facility was undrawn.

In 2021, the Company entered into a U.S. $500 million unsecured non-revolving term credit facility (the "term facility") with an initial due date of March 15, 2022. As at December 31, 2021, the Company had borrowings of U.S. $500 million ($634 million) under this term facility at a weighted-average interest rate of 1.38%. The agreement requires the Company to maintain a financial covenant in conjunction with the term facility. As at December 31, 2021, the Company satisfied the financial covenant.

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, 2021, the Company had total commercial paper borrowings of U.S. $265 million ($336 million), included in "Long-term debt maturing within one year" on the Company's Consolidated Balance Sheets (December 31, 2020 – $820 million). The weighted-average interest rate on these borrowings was 0.32% (December 31, 2020 - 0.27%). 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. 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, 2021 and 2020, the Company did not have any collateral posted on its bilateral letter of credit facilities but had letters of credit drawn of $58 million (December 31, 2020 – $59 million) from a total available amount of $300 million.