Financing arrangements

3 Months Ended

Mar. 31, 2020

Our borrowings consisted of the following (in millions):



	March 31, 2020			December 31, 2019
4.50% notes due 2020 (4.50% 2020 Notes)	$	—		$	300
2.125% notes due 2020 (2.125% 2020 Notes)	750			750
Floating Rate Notes due 2020	300			300
2.20% notes due 2020 (2.20% 2020 Notes)	700			700
3.45% notes due 2020 (3.45% 2020 Notes)	—			900
4.10% notes due 2021 (4.10% 2021 Notes)	—			1,000
1.85% notes due 2021 (1.85% 2021 Notes)	—			750
3.875% notes due 2021 (3.875% 2021 Notes)	1,450			1,750
1.25% €1,250 million notes due 2022 (1.25% 2022 euro Notes)	1,379			1,402
2.70% notes due 2022 (2.70% 2022 Notes)	500			500
2.65% notes due 2022 (2.65% 2022 Notes)	1,500			1,500
3.625% notes due 2022 (3.625% 2022 Notes)	750			750
0.41% CHF700 million bonds due 2023 (0.41% 2023 Swiss franc Bonds)	728			725
2.25% notes due 2023 (2.25% 2023 Notes)	750			750
3.625% notes due 2024 (3.625% 2024 Notes)	1,400			1,400
1.90% notes due 2025 (1.90% 2025 Notes)	500			—
3.125% notes due 2025 (3.125% 2025 Notes)	1,000			1,000
2.00% €750 million notes due 2026 (2.00% 2026 euro Notes)	827			841
2.60% notes due 2026 (2.60% 2026 Notes)	1,250			1,250
5.50% £475 million notes due 2026 (5.50% 2026 pound sterling Notes)	590			630
2.20% notes due 2027 (2.20% 2027 Notes)	750			—
3.20% notes due 2027 (3.20% 2027 Notes)	1,000			1,000
4.00% £700 million notes due 2029 (4.00% 2029 pound sterling Notes)	869			928
2.45% notes due 2030 (2.45% 2030 Notes)	1,250			—
6.375% notes due 2037 (6.375% 2037 Notes)	552			552
6.90% notes due 2038 (6.90% 2038 Notes)	291			291
6.40% notes due 2039 (6.40% 2039 Notes)	466			466
3.15% notes due 2040 (3.15% 2040 Notes)	1,250			—
5.75% notes due 2040 (5.75% 2040 Notes)	412			412
4.95% notes due 2041 (4.95% 2041 Notes)	600			600
5.15% notes due 2041 (5.15% 2041 Notes)	974			974
5.65% notes due 2042 (5.65% 2042 Notes)	487			487
5.375% notes due 2043 (5.375% 2043 Notes)	261			261
4.40% notes due 2045 (4.40% 2045 Notes)	2,250			2,250
4.563% notes due 2048 (4.563% 2048 Notes)	1,415			1,415
3.375% notes due 2050 (3.375% 2050 Notes)	1,250			—
4.663% notes due 2051 (4.663% 2051 Notes)	3,541			3,541
Other notes due 2097	100			100
Unamortized bond discounts, premiums and issuance costs, net	(892		)	(868		)
Fair value adjustments	648			296
Total carrying value of debt	31,848			29,903
Less current portion	(1,840		)	(2,953		)
Total long-term debt	$	30,008		$	26,950

There are no material differences between the effective interest rates and coupon rates of any of our borrowings, except for the 4.563% 2048 Notes and the 4.663% 2051 Notes, which have effective interest rates of 6.3% and 5.6%, respectively.

Debt issuances and repayments

During the three months ended March 31, 2020, we issued $5.0 billion of debt, consisting of the 1.90% 2025 Notes, the 2.20% 2027 Notes, the 2.45% 2030 Notes, the 3.15% 2040 Notes and the 3.375% 2050 Notes. In the event of a change-in-control triggering event, as defined in the terms of the notes, we may be required to purchase all or a portion of these notes at a price equal to 101% of the principal amount of the notes plus accrued and unpaid interest. In addition, these notes may be redeemed at any time at our option, in whole or in part, at the principal amount of the notes being redeemed plus accrued and unpaid interest and a “make-whole” amount, which are defined by the terms of the notes. The notes may be redeemed without payment of make-whole amounts if redemption occurs during specified periods of time immediately prior to the maturity of the notes. Such time periods range from one month to six months prior to maturity.

A portion of the proceeds from the issuance of these notes were used to redeem the 3.45% 2020 Notes, the 4.10% 2021 Notes, the 1.85% 2021 Notes and $300 million aggregate principal amount of our 3.875% 2021 Notes. In connection with the redemption of these notes, we paid a total of $50 million in make-whole amounts plus associated accrued and unpaid interest, all of which was recognized in Interest expense, net, in the Condensed Consolidated Statements of Income during the three months ended March 31, 2020. In addition to these redemptions, the 4.50% 2020 Notes matured and were repaid during the three months ended March 31, 2020.

Interest rate swaps

In connection with the redemption of certain of the notes discussed above, associated interest rate swap contracts with an aggregate notional value of $2.2 billion were terminated. Additionally, due to historically low interest rates, during the three months ended March 31, 2020, we terminated interest rate swaps with an aggregate notional amount of $5.2 billion that hedged the 3.625% 2024 Notes, 2.60% 2026 Notes, 4.663% 2051 Notes and portions of our 3.625% 2022 Notes and 3.125% 2025 Notes, which resulted in the receipt of $576 million of cash and reduced counterparty credit risk. Immediately following termination of these contracts, we entered into new interest rate swap agreements at then-current interest rates on the same $5.2 billion principal amount of notes. See Note 12, Derivative instruments.

The effective interest rates on notes for which we have entered into interest rate swap contracts and the related notional amounts of these contracts were as follows (dollar amounts in millions):



	March 31, 2020			December 31, 2019
Notes	Notional amounts		Effective interest rates	Notional amounts		Effective interest rates
3.45% 2020 Notes	$	—	LIBOR + 1.1%	$	900	LIBOR + 1.1%
4.10% 2021 Notes	—		LIBOR + 1.7%	1,000		LIBOR + 1.7%
3.875% 2021 Notes	1,450		LIBOR + 2.0%	1,750		LIBOR + 2.0%
3.625% 2022 Notes	750		LIBOR + 2.7%	750		LIBOR + 1.6%
3.625% 2024 Notes	1,400		LIBOR + 3.2%	1,400		LIBOR + 1.4%
3.125% 2025 Notes	1,000		LIBOR + 1.8%	1,000		LIBOR + 0.9%
2.60% 2026 Notes	1,250		LIBOR + 1.8%	1,250		LIBOR + 0.3%
4.663% 2051 Notes⁽¹⁾	1,500		LIBOR + 2.6%	1,500		LIBOR + 0.0%
Total notional amounts	$	7,350		$	9,550

^____________

⁽¹⁾

Excludes an additional 1.5% of interest for the difference between the coupon rate paid to note holders and the fixed rate received under the interest rate swap contracts.