Borrowings

9 Months Ended

Sep. 30, 2015

11. Borrowings:

Short-Term Debt

	At September 30,		At December 31,
(Dollars in millions)	2015		2014
Commercial paper	$	1,600	$	650
Short-term loans		653		480
Long-term debt – current maturities		5,286		4,601
Total	$	7,538	$	5,731

The weighted-average interest rate for commercial paper at September 30, 2015 and December 31, 2014 was 0.1 percent for both periods. The weighted-average interest rate for short-term loans was 5.1 percent and 4.0 percent at September 30, 2015 and December 31, 2014, respectively.


Long-Term Debt

Pre-Swap Borrowing

				Balance		Balance
(Dollars in millions)		Maturities	9/30/2015		12/31/2014
U.S. dollar notes and debentures (average interest rate at September 30, 2015):
1.41%	2015–2016		$	5,274	$	9,254
3.91%	2017–2018			8,773		6,835
2.24%	2019–2021			6,613		6,555
1.88%		2022		1,000		1,000
3.38%		2023		1,500		1,500
3.63%		2024		2,000		2,000
7.00%		2025		600		600
6.22%		2027		469		469
6.50%		2028		313		313
5.88%		2032		600		600
8.00%		2038		83		83
5.60%		2039		745		745
4.00%		2042		1,107		1,107
7.00%		2045		27		27
7.13%		2096		316		316
			$	29,420	$	31,404
Other currencies (average interest rate at September 30, 2015, in parentheses):				\
Euros (1.8%)	2015–2025		$	5,033	$	5,463
Pound sterling (2.7%)	2017–2022			1,597		1,176
Japanese yen (0.5%)	2017–2019			734		733
Swiss francs (6.3%)	2020			10		162
Canadian (2.2%)		2017		373		432
Other (10.9%)	2015–2020			176		367
			$	37,343	$	39,737
Less: net unamortized discount				840		853
Add: fair value adjustment*				904		792
			$	37,407	$	39,675
Less: current maturities				5,286		4,601
Total			$	32,122	$	35,073

* The portion of the company’s fixed-rate debt obligations that is hedged is reflected in the Consolidated Statement of Financial Position as an amount equal to the sum of the debt’s carrying value plus a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates.

The company’s indenture governing its debt securities and its various credit facilities each contain significant covenants which obligate the company to promptly pay principal and interest, limit the aggregate amount of secured indebtedness and sale and leaseback transactions to 10 percent of the company’s consolidated net tangible assets, and restrict the company’s ability to merge or consolidate unless certain conditions are met. The credit facilities also include a covenant on the company’s consolidated net interest expense ratio, which cannot be less than 2.20 to 1.0, as well as a cross default provision with respect to other defaulted indebtedness of at least $500 million.

The company is in compliance with all of its significant debt covenants and provides periodic certifications to its lenders. The failure to comply with its debt covenants could constitute an event of default with respect to the debt to which such provisions apply. If certain events of default were to occur, the principal and interest on the debt to which such event of default applied would become immediately due and payable.

Pre-swap annual contractual maturities of long-term debt outstanding at September 30, 2015, are as follows:


(Dollars in millions)	Total
2015 (for Q4)	$	68
2016		5,257
2017		5,345
2018		4,673
2019		4,023
2020 and beyond		17,977
Total	$	37,343

Interest on Debt


(Dollars in millions)
For the nine months ended September 30:	2015		2014
Cost of financing	$	407	$	407
Interest expense		346		366
Net investment derivative activity		(6)		1
Interest capitalized		(1)		3
Total interest paid and accrued	$	746	$	777