Borrowings and Lines of Credit

9 Months Ended

Sep. 30, 2020


(dollars in millions)	September 30, 2020		December 31, 2019
Commercial paper	$	490	$	—
Other borrowings	48		34
Total short-term borrowings	$	538	$	34

As of September 30, 2020, we had an aggregate of $1.5 billion unsecured, unsubordinated commercial paper programs in place. We plan to use our commercial paper borrowings for general corporate purposes including to finance acquisitions, pay dividends and for debt refinancing. The need for commercial paper borrowings may arise if the use of domestic cash for general corporate purposes exceeds the sum of domestic cash generation and foreign cash repatriated to the United States ("U.S."). In September 2020, we issued €420 million of Euro denominated commercial paper. The Company used the proceeds from the commercial paper issuance to pay down a portion of the principal balance of the term loan described below. The Euro-denominated commercial paper qualifies as a net investment hedge against our investments in European businesses. As of September 30, 2020, the net investment hedge is deemed to be effective.

As of September 30, 2020, we had a credit agreement, as amended, with various banks providing for a $1.5 billion unsecured, unsubordinated 5-year revolving credit facility, effective as of April 3, 2020, with an interest rate of LIBOR plus 125 basis points and a commitment fee rate of 12.5 basis points. As of September 30, 2020, there were no borrowings under the revolving credit facility. The undrawn portion of the revolving credit facility serves as a backstop for the issuance of commercial paper.

On February 10, 2020, the Company entered into a term loan credit agreement, as amended, providing for a $1.0 billion unsecured, unsubordinated 3-year term loan credit facility (the "term loan"). On March 27, 2020, the Company drew on the full amount of the term loan. On September 28, 2020, we made a $750 million prepayment of our term loan.

Additionally, on February 27, 2020, we issued $5.3 billion unsecured, unsubordinated notes.

The net proceeds of the term loan and the notes described above of approximately $6.3 billion in the aggregate were distributed to UTC during the quarter ended March 31, 2020.

The revolving credit agreement, term loan credit agreement and indenture contain affirmative and negative covenants customary for financings of these types that, among other things, limit the Company's and its subsidiaries’ ability to incur additional liens, to make certain fundamental changes and to enter into sale and leaseback transactions. In addition, the revolving credit agreement and the term loan credit agreement require that we maintain a maximum consolidated leverage ratio as defined in the agreements, commencing with the test period ending September 30, 2020. The revolving credit agreement,

term loan credit agreement and indenture also contain events of default customary for financings of these types. The Company is in compliance with all covenants as of September 30, 2020.

Long-term debt as of September 30, 2020 and December 31, 2019 consisted of the following:


(dollars in millions)	September 30, 2020		December 31, 2019
LIBOR plus 112.5 bps term loan due 2023 2,4,5	$	250	$	—
LIBOR plus 45 bps floating rate notes due 2023 1,3	500		—
2.056% notes due 2025 3	1,300		—
2.293% notes due 2027 3	500		—
2.565% notes due 2030 3	1,500		—
3.112% notes due 2040 3	750		—
3.362% notes due 2050 3	750		—
Other (including finance leases)	7		5
Total principal long-term debt	5,557		5
Other (discounts and debt issuance costs)	(45)		—
Total long-term debt	5,512		5
Less: current portion	—		—
Long-term debt, net of current portion	$	5,512	$	5

1 The three-month LIBOR rate at September 30, 2020 was approximately 0.23%.

2 The six-month LIBOR rate at September 30, 2020 was approximately 0.26%.

3 On February 27, 2020, we issued $5.3 billion of unsecured, unsubordinated notes. We may redeem these notes at our option pursuant to certain terms.

4 On March 27, 2020, we drew down $1.0 billion of our term loan.

5 On September 28, 2020, we made a $750 million loan prepayment of our term loan.

Debt issuance costs are presented as a reduction of debt on the Condensed Consolidated Balance Sheets and are amortized as a component of interest expense over the term of the related debt using the effective interest method. The unamortized debt issuance costs at September 30, 2020 is approximately $45 million.

The average maturity of our long-term debt at September 30, 2020 is approximately 11.1 years. The average interest expense rate on our total borrowings for the quarter and nine months ended September 30, 2020 is approximately 2.42% and 2.46%, respectively. The schedule of principal payments required on long-term debt for the next five years and thereafter is:


(dollars in millions)
2020	$	—
2021	3
2022	2
2023	751
2024	1
Thereafter	4,800
Total	$	5,557