Financial Instruments

6 Months Ended

Jun. 30, 2025

Investments, All Other Investments [Abstract]

Interest Rate Derivatives

We have entered into a series of interest rate swaps to fix the SOFR of our External Debt Facilities.

The aggregate notional amount of interest rate swaps in effect as of both June 30, 2025 and December 31, 2024 was $1,150 million, and the SOFR is fixed at an annual rate of 0.40% to 3.40% (for an annual effective interest rate of 2.15% to 5.15%, including margin). These interest rate swaps that are in effect have maturity dates of less than one year, and a weighted average effective rate of 4.38%.

Additionally, during the three months ended June 30, 2025, we entered into additional interest rate swaps with forward start dates beginning in February 2026, that had an aggregate notional value of $900 million, which fixes the SOFR to an annual rate of 3.33% to 3.41% (for an annual effective interest rate of 5.08% to 5.16%, including margin). These interest rate swaps with forward start dates have maturity dates between March 2028 and March 2031, and a weighted average effective rate of 5.12%.

The interest rate swaps outstanding as of June 30, 2025 hedge a portion of the interest rate exposure resulting from borrowings under our Term Loan Facility. We have classified these instruments as cash flow hedges. The effective portion of the gain or loss on the open hedging instrument is recorded in accumulated other comprehensive income and is reclassified into earnings as interest expense, net when settled. The associated asset or liability on the open hedges is recorded at its fair value in other assets or other liabilities, as applicable. The fair value of the interest rate swaps was determined using a discounted cash flow method based on market-based swap yield curves, taking into account current interest rates, and is classified as Level 2 within the fair value hierarchy.

The fair value of the assets and liabilities associated with our interest rate swaps, as reflected gross in the condensed consolidated balance sheets, were as follows:


	As of June 30, 2025		As of December 31, 2024
	(in millions)
Assets:
Other current assets	$	8	$	15
Other assets	—		1
Total assets	$	8	$	16

Liabilities:
Other liabilities	2		—
Total liabilities	$	2	$	—