Revolving Credit Facility and Commercial Paper Program

3 Months Ended

Mar. 31, 2022

Revolving Credit Facility and Commercial Paper Program

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Revolving Credit Facility and Commercial Paper Program

A.    Credit Facility

We have a $3.0 billion unsecured revolving credit facility with an initial term that expires in March 2023 and includes, at our option, two six-month extensions. The revolving credit facility allows us to borrow in up to 14 currencies, including U.S. dollars, and has a $1.0 billion expansion option, which is subject to obtaining lender commitments. Under our credit facility, our investment grade credit ratings as of March 31, 2022, provide for financing at the London Interbank Offered Rate, commonly referred to as LIBOR, plus 0.775% with a facility commitment fee of 0.125%, for all-in drawn pricing of 0.90% over LIBOR. The borrowing rate is subject to an interest rate floor and may change if our investment grade credit ratings change. We also have other interest rate options available to us under our revolving credit facility. Our revolving credit facility is unsecured and, accordingly, we have not pledged any assets as collateral for this obligation.

LIBOR is in the process of being discontinued. While certain U.S. dollar LIBOR settings will continue to be published on the current basis until June 30, 2023, all other LIBOR settings either are no longer being published or are being published only for a limited time and only on a “synthetic” basis (i.e., not on the basis of submissions made by panel banks). The regulator of the administrator of LIBOR has prohibited any new use of LIBOR by firms subject to its supervision, and certain regulators in the United States have stated that no new contracts using U.S. dollar LIBOR should be entered into after 2021. Our revolving credit facility and term loan facility were amended in December 2021 to include provisions for establishing alternative reference rates when LIBOR is no longer available.

In April 2022, we amended our Credit Facility. See note 20, Subsequent Events.

At March 31, 2022, credit facility origination costs of $3.7 million are included in other assets, net, as compared to $4.4 million at December 31, 2021, on our consolidated balance sheet. These costs are being amortized over the remaining term of our revolving credit facility.

At March 31, 2022, we had a borrowing capacity of $2.43 billion available on our revolving credit facility (subject to customary conditions to borrowing) and $569.6 million outstanding balance, as compared to an outstanding balance at December 31, 2021, of $650.0 million.

The weighted average interest rate on outstanding borrowings under our revolving credit facility was 1.1% during the three months ended March 31, 2022, and 0.8% during the three months ended March 31, 2021. At March 31, 2022, our weighted average interest rate on borrowings outstanding under our revolving credit facility was 1.2%. Our revolving credit facility is subject to various leverage and interest coverage ratio limitations, and at March 31, 2022, we were in compliance with the covenants on our revolving credit facility.

B.    Commercial Paper Program

We have a U.S. dollar-denominated unsecured commercial paper program. Under the terms of the program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding of $1.0 billion. The commercial paper ranks on a parity in right of payment with all of our other unsecured senior indebtedness outstanding from time to time, including borrowings under our revolving credit facility, our term loan and our outstanding senior unsecured notes. Proceeds from commercial paper borrowings are generally used for general corporate purposes. As of March 31, 2022, the balance of borrowings outstanding under our commercial paper program was $950.0 million as compared to $901.4 million outstanding commercial paper borrowings at December 31, 2021. The weighted average interest rate on outstanding borrowings under our commercial paper program was 0.5% for the three months ended March 31, 2022, and 0.3% for the three months ended March 31, 2021. As of March 31, 2022, our weighted average interest rate on borrowings outstanding under our commercial paper program was 0.8%. We use our $3.0 billion revolving credit facility as a liquidity backstop for the repayment of the notes issued under the commercial paper program. The commercial paper borrowings generally carry a term of less than a year.