Borrowings

3 Months Ended

Mar. 31, 2016

11. Borrowings:

Short-Term Debt

	At March 31,		At December 31,
(Dollars in millions)	2016		2015
Commercial paper	$	—	$	600
Short-term loans		302		590
Long-term debt – current maturities		5,000		5,271
Total	$	5,303	$	6,461

The weighted-average interest rate for commercial paper at December 31, 2015 was 0.4 percent. The weighted-average interest rate for short-term loans was 8.6 percent and 5.2 percent at March 31, 2016 and December 31, 2015, respectively.


Long-Term Debt

Pre-Swap Borrowing

				Balance		Balance
(Dollars in millions)		Maturities	3/31/2016		12/31/2015
U.S. dollar notes and debentures (average interest rate at March 31, 2016):
3.00%	2016–2017		$	8,239	$	9,351
3.17%	2018–2019			8,826		7,591
1.71%	2020–2021			4,940		3,717
2.35%		2022		1,901		1,900
3.38%		2023		1,500		1,500
3.63%		2024		2,000		2,000
7.00%		2025		600		600
3.45%		2026		1,350		—
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
4.70%		2046		650		—
7.13%		2096		316		316
			$	33,667	$	30,319
Other currencies (average interest rate at March 31, 2016, in parentheses):				\
Euros (1.6%)	2016–2028		$	7,691	$	4,892
Pound sterling (2.7%)	2017–2022			1,514		1,555
Japanese yen (0.4%)	2017–2022			1,262		1,180
Swiss francs (6.3%)	2020			9		9
Canadian (2.2%)		2017		386		360
Other (13.6%)	2016–2020			658		506
			$	45,188	$	38,820
Less: net unamortized discount				861		838
Less: net unamortized debt issuance cost				95		74
Add: fair value adjustment*				1,022		790
			$	45,254	$	38,699
Less: current maturities				5,000		5,271
Total			$	40,254	$	33,428

* 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 March 31, 2016, are as follows:


(Dollars in millions)	Total
2016 (for Q2-Q4)	$	3,198
2017		6,798
2018		4,777
2019		5,271
2020		4,873
2021 and beyond		20,272
Total	$	45,188

Interest on Debt


(Dollars in millions)
For the three months ended March 31:	2016		2015
Cost of financing	$	138	$	140
Interest expense		157		108
Net investment derivative activity		(10)		0
Interest capitalized		1		(2)
Total interest paid and accrued	$	286	$	245