Debt and Credit Agreements

9 Months Ended

Sep. 30, 2020

Total activity related to long-term debt as of the end of third quarter 2020 is shown in the table below. For fair value information related to the Company's long-term debt, see Note 10, Fair Value Measurements.


(Dollars in millions)	Current Portion		Long-term Portion		Total
Long-term debt as of December 31, 2019	$	245	$	15,993	$	16,238
2020 activity:
Long-term debt issued	—		500		500
Long-term debt repaid	(245)		—		(245)
Reclassifications	371		(371)		—
Discount, premium and other activity	—		(1)		(1)

Long-term debt as of September 30, 2020	$	371	$	16,121	$	16,492

Debt Issuance

On March 30, 2020, CSX issued $500 million of 3.8% notes due 2050. These notes are included in the consolidated balance sheets under long-term debt and may be redeemed by the Company at any time, subject to payment of certain make-whole premiums. The net proceeds will be used for general corporate purposes, which may include debt repayments, repurchases of CSX’s common stock, capital investment, working capital requirements, improvements in productivity and other cost reductions.

Interest Rate Derivatives

On both April 29, 2020, and July 9, 2020, the Company executed a forward starting interest rate swap with a notional value of $250 million for an aggregate notional value of $500 million. These swaps were effected to hedge the benchmark interest rate associated with future interest payments related to the anticipated refinancing of $850 million of 3.25% notes due in 2027. In accordance with the Derivatives and Hedging Topic in the ASC, the Company has designated these swaps as cash flow hedges. As of September 30, 2020, the asset value of the forward starting interest rate swaps was $44 million and was recorded in other long-term assets on the consolidated balance sheet.

Unrealized gains or losses associated with changes in the fair value of the hedge are recorded net of tax in accumulated other comprehensive income (“AOCI”) on the consolidated balance sheet. Unless settled early, the swaps will expire in 2027 and the unrealized gain or loss in AOCI will be recognized in earnings as an adjustment to interest expense over the same period during which the hedged transaction affects earnings. Unrealized gains, recorded net of tax in other comprehensive income, related to the hedge were $25 million and $34 million for the quarter and nine months ended September 30, 2020, respectively.

Credit Facility

CSX has a $1.2 billion unsecured, revolving credit facility backed by a diverse syndicate of banks. This facility allows same-day borrowings at floating interest rates, based on LIBOR or an agreed-upon replacement, plus a spread that depends upon CSX's senior unsecured debt ratings. LIBOR is the London Interbank Offered Rate which is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds. This facility expires in March 2024, and at September 30, 2020, the Company had no outstanding balances under this facility.

Commitment fees and interest rates payable under the facility were similar to fees and rates available to comparably rated investment-grade borrowers. As of third quarter 2020, CSX was in compliance with all covenant requirements under this facility.

NOTE 7. Debt and Credit Agreements, continued

Commercial Paper

Under its commercial paper program, which is backed by the revolving credit facility, the Company may issue unsecured commercial paper notes up to a maximum aggregate principal amount of $1.0 billion outstanding at any one time. Proceeds from issuances of the notes are expected to be used for general corporate purposes. At September 30, 2020, the Company had no outstanding debt under the commercial paper program.