DEBT

6 Months Ended

Jun. 30, 2019

The carrying value of debt outstanding, net of unamortized debt issuance costs, was as follows at June 30, 2019 and December 31, 2018:



	June 30, 2019		December 31, 2018
	(in millions)
Short-term debt:
Commercial paper	$	300	$	645
Term note	650		650
Senior note:
$400 million, 2.625% due October 1, 2019	399		399
Total short-term debt	$	1,349	$	1,694

Long-term debt:
Senior notes:
$400 million, 2.50% due December 15, 2020	$	399	$	398
$400 million, 2.90% due December 15, 2022	397		396
$600 million, 3.15% due December 1, 2022	597		596
$600 million, 3.85% due October 1, 2024	597		597
$600 million, 3.95% due March 15, 2027	595		594
$250 million, 8.15% due June 15, 2038	262		263
$400 million, 4.625% due December 1, 2042	396		396
$750 million, 4.95% due October 1, 2044	739		739
$400 million, 4.80% due March 15, 2047	395		396
Total long-term debt	$	4,377	$	4,375

Senior Notes

Our senior notes, which are unsecured, may be redeemed at our option at any time at 100% of the principal amount plus accrued interest and a specified make-whole amount. The 8.15% senior notes are subject to an interest rate adjustment if the debt ratings assigned to the notes are downgraded (or subsequently upgraded). In addition, our senior notes contain a change of control provision that may require us to purchase the notes under certain circumstances.

Credit Agreement

Our 5-year, $2.0 billion unsecured revolving credit agreement expires May 2022. Under the credit agreement, at our option, we can borrow on either a competitive advance basis or a revolving credit basis. The revolving credit portion bears interest at either LIBOR plus a spread or the base rate plus a spread. The LIBOR spread, currently 110.0 basis points, varies depending on our credit ratings ranging from 91.0 to 150.0 basis points. We also pay an annual facility fee regardless of utilization. This facility fee, currently 15.0 basis points, may fluctuate between 9.0 and 25.0 basis points, depending upon our credit ratings. The competitive advance portion of any borrowings will bear interest at market rates prevailing at the time of borrowing on either a fixed rate or a floating rate based on LIBOR, at our option.

The terms of the credit agreement include standard provisions related to conditions of borrowing which could limit our ability to borrow additional funds. In addition, the credit agreement contains customary restrictive covenants and a financial covenant regarding maximum debt to capitalization of 50%, as well as customary events of default. We are in compliance with this financial covenant, with actual debt to capitalization of 32.5% as measured in accordance with the credit agreement as of June 30, 2019. Upon our agreement with one or more financial institutions, we may expand

the aggregate commitments under the credit agreement to a maximum of $2.5 billion, through a $500 million incremental loan facility.

At June 30, 2019, we had no borrowings and no letters of credit outstanding under the credit agreement. Accordingly, as of June 30, 2019, we had $2.0 billion of remaining borrowing capacity (which excludes the uncommitted $500 million incremental loan facility under the credit agreement), none of which would be restricted by our financial covenant compliance requirement. We have other customary, arms-length relationships, including financial advisory and banking, with some parties to the credit agreement.

Commercial Paper

Under our commercial paper program we may issue short-term, unsecured commercial paper notes privately placed on a discount basis through certain broker dealers at any time not to exceed $2 billion. Amounts available under the program may be borrowed, repaid and re-borrowed from time to time. The net proceeds of issuances have been and are expected to be used for general corporate purposes. The maximum principal amount outstanding at any one time during the six months ended June 30, 2019 was $670 million, with $300 million outstanding at June 30, 2019 compared to $645 million outstanding at December 31, 2018. The outstanding commercial paper at June 30, 2019 had a weighted average annual interest rate of 2.85%.

Term Note

In November 2018, we entered into a $1.0 billion term note agreement with a bank at a variable rate of interest due within one year. We may elect to incur interest at either the bank's base rate or LIBOR plus 115 basis points. The base rate is defined as the higher of the daily federal funds rate plus 50 basis points; or the bank's prime rate; or LIBOR plus 100 basis points. The interest rate in effect at June 30, 2019 was 3.55%. The note is prepayable without penalty. We repaid $350 million prior to December 31, 2018. The term note shares the customary terms and provisions as well as financial covenants of our Credit Agreement, as discussed above.