Debt

12 Months Ended

Dec. 31, 2018

Note 5 – Debt

The outstanding amounts of debt and capital leases for the years ended December 31 were as follows:

(In millions)	Issuer	2018		2017
Short-term debt
Current maturities: $1,000 million, 2.25% Senior Notes	Express Scripts	$	995	$	-
Current maturities: $337 million, 7.25% Senior Notes	ESI		343		-
Commercial paper	Old Cigna		1,500		100
Current maturities: $131 million, 6.35% Notes	Old Cigna		-		131
Other, including capital leases	various		117		9
Total short-term debt		$	2,955	$	240
Long-term uncollateralized debt
Cigna debt (issued to finance acquisition)
$1,000 million, Floating Rate Notes due 2020	Cigna	$	997	$	-
$1,750 million, 3.2% Notes due 2020	Cigna		1,743		-
$1,000 million, Floating Rate Notes due 2021	Cigna		996		-
$1,250 million, 3.4% Notes due 2021	Cigna		1,245		-
$3,000 million, Floating Rate Term Loan due 2021	Cigna		2,997		-
$700 million, Floating Rate Notes due 2023	Cigna		697		-
$3,100 million, 3.75% Notes due 2023	Cigna		3,085		-
$2,200 million, 4.125% Notes due 2025	Cigna		2,187		-
$3,800 million, 4.375% Notes due 2028	Cigna		3,774		-
$2,200 million, 4.8% Notes due 2038	Cigna		2,178		-
$3,000 million, 4.9% Notes due 2048	Cigna		2,964		-

Express Scripts debt (assumed in acquisition)
$500 million, 4.125% Senior Notes due 2020	Medco		506		-
$500 million, 2.600% Senior Notes due 2020	Express Scripts		493		-
$400 million, Floating Rate Senior Notes due 2020	Express Scripts		399		-
$500 million, 3.300% Senior Notes due 2021	Express Scripts		499		-
$1,250 million, 4.750% Senior Notes due 2021	Express Scripts		1,285		-
$1,000 million, 3.900% Senior Notes due 2022	Express Scripts		998		-
$500 million, 3.050% Senior Notes due 2022	Express Scripts		481		-
$1,000 million, 3.000% Senior Notes due 2023	Express Scripts		959		-
$1,000 million, 3.500% Senior Notes due 2024	Express Scripts		966		-
$1,500 million, 4.500% Senior Notes due 2026	Express Scripts		1,508		-
$1,500 million, 3.400% Senior Notes due 2027	Express Scripts		1,386		-
$449 million, 6.125% Senior Notes due 2041	Express Scripts		493		-
$1,500 million, 4.800% Senior Notes due 2046	Express Scripts		1,465		-

Old Cigna debt (pre-acquisition)
$250 million, 4.375% Notes due 2020	Old Cigna		248		249
$300 million, 5.125% Notes due 2020	Old Cigna		298		299
$78 million, 6.37% Notes due 2021	CGC		78		78
$300 million, 4.5% Notes due 2021	Old Cigna		297		299
$750 million, 4% Notes due 2022	Old Cigna		746		745
$100 million, 7.65% Notes due 2023	Old Cigna		100		100
$17 million, 8.3% Notes due 2023	Old Cigna		17		17
$900 million, 3.25% Notes due 2025	Old Cigna		895		894
$600 million, 3.05% Notes due 2027	Old Cigna		595		594
$259 million, 7.875% Debentures due 2027	Old Cigna		259		258
$45 million, 8.3% Step Down Notes due 2033	Old Cigna		45		45
$191 million, 6.15% Notes due 2036	Old Cigna		190		190
$121 million, 5.875% Notes due 2041	Old Cigna		119		119
$317 million, 5.375% Notes due 2042	Old Cigna		315		315
$1,000 million, 3.875% Notes due 2047	Old Cigna		988		988

Other, including capital leases	Other		32		9
Total long-term debt		$	39,523	$	5,199

Notes issued to fund the Express Scripts acquisition. As presented in the table above, the Company issued private placement Notes with registration rights in the third quarter of 2018 to finance the Express Scripts acquisition. Total proceeds were approximately $20.0 billion. Interest on this debt is generally paid semi-annually except for quarterly interest payments on the floating rate notes.

Term Loan Credit Agreement. Cigna borrowed $3.0 billion under its Term Loan Credit Agreement (the “Term Loan Credit Agreement”) to finance the Merger and to pay fees and expenses of the Merger. The Term Loan Credit Agreement is diversified among 26 banks and contains customary covenants and restrictions, including a financial covenant that Cigna’s leverage ratio may not exceed 60%. There is no remaining amount available for borrowing under this agreement.

Bridge Facility. In March 2018, Cigna entered into a commitment letter (the “Commitment Letter”) with Morgan Stanley Senior Funding, Inc., The Bank of Tokyo-Mitsubishi UFJ, Ltd and 21 additional banks, to provide a $26.7 billion, 364-day senior unsecured bridge facility (the “Bridge Facility”) in connection with the Merger. The Company incurred approximately $140 million in fees in 2018 for the Bridge Facility that expired upon the close of the Merger.

Revolving Credit Agreement. Cigna has a Revolving Credit and Letter of Credit Agreement (the “Revolving Credit Agreement”) that matures on April 6, 2023 and is diversified among 23 banks.

Cigna can borrow up to $3.25 billion for general corporate purposes, with up to $500 million available for issuance of letters of credit, decreased by $22 million of letters of credit under the Revolving Credit Agreement as of December 31, 2018. The Revolving Credit Agreement also includes an option to increase the facility amount up to $500 million and an option to extend the termination date for additional one year periods, subject to consent of the banks.

The Revolving Credit Agreement contains customary covenants and restrictions, including a financial covenant that the Company’s leverage ratio may not exceed 60%.

Cigna is the borrower under the Revolving Credit Agreement and the Term Loan Credit Agreement and certain subsidiaries of Cigna may be required to guarantee these obligations under certain circumstances.

Commercial Paper. Old Cigna issued $1.5 billion under the commercial paper program to finance the Merger.

Assumption of Express Scripts Debt. The Company assumed debt obligations of Express Scripts, ESI and Medco as described in the table above in the acquisition under substantially unchanged terms.

The Company was in compliance with its debt covenants as of December 31, 2018.

Other debt financing transactions. In the third quarter of 2017, Old Cigna entered into the following debt transactions:

On September 14, 2017, Old Cigna issued $1.6 billion long-term debt and the proceeds were used to pay for the cash tender offer described below. Old Cigna also used the proceeds for general corporate purposes, including the repayment of its Notes that matured in 2018.

Old Cigna completed a cash tender offer to purchase $1.0 billion of aggregate principal amount of certain of its outstanding debt securities in the third quarter of 2017 and recorded a pre-tax loss of $321 million ($209 million after-tax), primarily for premiums paid.

Old Cigna repaid $131 million and $250 million of long-term notes that matured during the first quarter of 2018 and 2017 respectively.

Maturities of outstanding long-term debt and capital leases are as follows:

	Scheduled Maturities
(In millions)	Long-term Debt⁽¹⁾		Capital Leases
2019	$	1,337	$	17
2020	$	4,700	$	14
2021	$	7,378	$	4
2022	$	2,250	$	4
2023	$	4,917	$	4
Maturities after 2023	$	20,582	$	7

(1) Long-term debt maturity amounts exclude capital leases.

Interest expense on long-term and short-term debt was $507 million in 2018, $243 million in 2017, and $251 million in 2016, excluding losses on the early extinguishment of debt.