Debt

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Debt

Debt

The Company has a $2.5 billion credit facility that expires in July 2022. The Company had no letters of credit outstanding under the credit facility as of June 30, 2019 and December 31, 2018. During the three months ended June 30, 2019 and 2018, the maximum amounts of outstanding borrowings at any time under the credit facility were $0.6 billion and $1.5 billion, respectively, the average daily balances were approximately $0.3 billion and $0.9 billion, respectively, and interest was incurred at weighted average annual interest rates of 4.0% and 3.4%, respectively. During the six months ended June 30, 2019 and 2018, the maximum amounts of outstanding borrowings at any time under the credit facility were $1.1 billion and $1.6 billion, respectively, the average daily balances were approximately $0.5 billion and $1.2 billion, respectively, and interest was incurred at weighted average annual interest rates of 4.0% and 3.2%, respectively.

On May 31, 2019, the Company entered into a Term Loan Agreement (Term Loan Agreement) providing for a $1.0 billion unsecured term loan facility (Term Loan Facility) and borrowed $1.0 billion under the Term Loan Facility. The Company used the net proceeds to repay the $700 million in aggregate principal amount of 8.125% Senior Notes which matured on June 1, 2019, to repay outstanding borrowings under the Company’s $2.5 billion credit facility and to pay accrued interest and fees and expenses related to the foregoing and the Term Loan Agreement. Remaining proceeds from the borrowing were used by the Company for general corporate purposes. The Term Loan Facility matures on May 31, 2021.

At the Company’s election, the $1.0 billion in borrowings under the Term Loan Facility bear interest at a eurodollar rate as defined in the Term Loan Agreement plus a margin determined on the basis of the Company’s credit ratings. This margin is 1.00% based on the Company’s current credit ratings. The Company may voluntarily prepay borrowings under the Term Loan Facility, in whole or in part, without premium or penalty, but subject to reimbursement of funding losses with respect to prepayment. Borrowings under the Term Loan Facility that are repaid may not be reborrowed. The Company had $1.0 billion of outstanding borrowings under the Term Loan Facility as of June 30, 2019 and interest was incurred at a weighted average annual interest rate of 3.4%.

The Term Loan Agreement contains certain representations and warranties and various affirmative and negative covenants and events of default, including (i) a restriction on the ability of the Company or its subsidiaries to incur or permit liens on assets, subject to certain significant exceptions, (ii) the establishment of a maximum ratio of consolidated debt to total capital of the Company and its subsidiaries such that consolidated debt shall at no time exceed 65% of total capital, (iii) a limitation on certain changes to the Company’s business, and (iv) certain restrictions related to mergers or acquisitions.