Long-Term Debt and Revolving Promissory Note

Long-term debt, including unamortized discounts and premiums and note payable-affiliate, were as follows:



			As of December 31,
	Interest Rates	Maturities	2014			2013
			(Dollars in millions)
Senior notes	6.125% - 8.375%	2015 - 2054	$	7,311		7,411
Capital lease and other obligations	Various	Various	32			72
Unamortized premiums, net			36			75
Total long-term debt			7,379			7,558
Less current maturities			(117		)	(637	)
Long-term debt, excluding current maturities			$	7,262		6,921
Note payable-affiliate	6.657%	2022	$	796		754

New Issuances

2014

On September 29, 2014, we issued $500 million aggregate principal amount of 6.875% Notes due 2054, in exchange for net proceeds, after deducting underwriting discounts and other expenses, of $483 million. The Notes are senior unsecured obligations and may be redeemed, in whole or in part, on or after October 1, 2019, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest to the redemption date.

2013

On May 23, 2013, we issued $775 million aggregate principal amount of 6.125% Notes due 2053, including $25 million principal amount that was sold pursuant to an over-allotment option granted to the underwriters for the offering, in exchange for net proceeds, after deducting underwriting discounts and other expenses, of approximately $752 million. The Notes are unsecured obligations and may be redeemed, in whole or in part, on or after June 1, 2018 at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest to the redemption date.

Repayments

2014

On October 1, 2014, we paid at maturity the $600 million principal amount of our 7.50% Notes.

2013

On June 17, 2013, we paid at maturity the $750 million principal amount of our floating rate Notes.

Aggregate Maturities of Long-Term Debt

Aggregate maturities of our long-term debt (excluding unamortized premiums, discounts and other and excluding note payable-affiliate):



	(Dollars in millions)⁽¹⁾
2015	$	117
2016	237
2017	500
2018	—
2019	—
2020 and thereafter	6,489
Total long-term debt	$	7,343

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⁽¹⁾Actual principal paid in all years may differ due to the possible future refinancing of outstanding debt or the issuance of new debt.

Revolving Promissory Note

We are currently indebted to an affiliate of our ultimate parent company, CenturyLink, under a revolving promissory note that provides us with a funding commitment of up to $1.0 billion aggregate principal amount through June 30, 2022, of which $796 million was outstanding as of December 31, 2014. As of December 31, 2014, the weighted average interest rate was 6.657%. As of December 31, 2014 and 2013, this revolving promissory note is reflected on our consolidated balance sheets as a current liability under “Note payable-affiliate”. As of December 31, 2014, $9 million of accrued interest is reflected in other current liabilities on our consolidated balance sheet. In accordance with the note agreement, all accrued and unpaid interest is capitalized to the unpaid principal balance on April 1 and November 1 of each year.

Interest Expense

Interest expense includes interest on long-term debt. The following table presents the amount of gross interest expense, net of capitalized interest and interest expense-affiliates, net:



	Years Ended December 31,
	2014			2013		2012
	(Dollars in millions)
Interest expense:
Gross interest expense	$	481		467		461
Capitalized interest	(17		)	(17	)	(18	)
Total interest expense	$	464		450		443
Interest expense-affiliates, net	$	40		64		24

Covenants

The indentures governing our notes contain certain covenants including, but not limited to: (i) a prohibition on certain liens on our assets; and (ii) a limitation on mergers or sales of all, or substantially all, of our assets, which limitation requires that a successor assume the obligation with regard to these notes. These indentures do not contain any cross-default provisions.

Our senior notes were issued under indentures dated April 15, 1990 and October 15, 1999. These indentures do not contain any financial covenants, but do include restrictions that limit our ability to (i) incur, issue or create liens upon our property and (ii) consolidate with or merge into, transfer or lease all or substantially all of our assets to any other party.

As of December 31, 2014, we believe we were in compliance with the provisions and covenants of our debt agreements.

Subsequent Event

On February 20, 2015, we entered into a new credit agreement with several lenders that allows us to borrow up to $100 million under a term loan. Under this new agreement, we borrowed $100 million under a ten-year term note that expires on February 20, 2025.