Debt

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Debt

Note 6. Debt

Significant Debt Transactions

Debt or equity financing may be needed to fund additional investments or development activities or to maintain an appropriate capital structure to ensure our financial flexibility.

The following tables show the significant transactions involving the senior unsecured debt securities of Verizon and its subsidiaries that occurred during the nine months ended September 30, 2021.

Exchange Offers

(dollars in millions)	Principal Amount Exchanged		Principal Amount Issued
Verizon 0.750% - 4.150% notes and floating rate notes, due 2024 - 2026	$	4,480	$	—
Verizon 2.355% notes due 2032 (1)	—		4,664
Three and Nine Months Ended September 30, 2021 total (2)	$	4,480	$	4,664

(1) The principal amount issued in exchange does not include either an insignificant amount of cash paid in lieu of the issuance of fractional new notes or accrued and unpaid interest paid on the old notes accepted for exchange to the date of exchange.

(2) The debt exchange offers above meet the criteria to be accounted for as a modification of debt. As a result, the excess of the principal amount of new notes issued over the principal amount of notes exchanged of $184 million was recorded as a discount to Long-term debt in the condensed consolidated balance sheets.

Repayments, Redemptions and Repurchases

(dollars in millions)	Principal Repaid/ Redeemed/ Repurchased		Amount Paid (1)
Three Months Ended June 30, 2021
Verizon 2.946% notes due 2022	$	713	$	730
Verizon 2.450% notes due 2022	794		819
Verizon 5.150% notes due 2023	3,190		3,519
Open market repurchases of various Verizon and subsidiary notes	1,994		2,440
Three Months Ended June 30, 2021 total	6,691		7,508
Nine Months Ended September 30, 2021 total	$	6,691	$	7,508

(1) Represents amount paid to repay, redeem, or repurchase, excluding interest or dividend.

During October 2021, we notified investors of our intention to redeem in November 2021 all of the approximately $478 million outstanding aggregate principal amount of 4.150% notes due 2024.

Issuances

(amounts in millions)	Principal Amount Issued		Net Proceeds (1)
Three Months Ended March 31, 2021
Verizon 0.750% notes due 2024	$	1,750	$	1,746
Verizon floating rate (Compounded SOFR(2) + 0.500%) notes due 2024	750		748
Verizon 1.450% notes due 2026	2,750		2,737
Verizon floating rate (Compounded SOFR(2) + 0.790%) notes due 2026	750		748
Verizon 2.100% notes due 2028	3,000		2,988
Verizon 2.550% notes due 2031	4,250		4,216
Verizon 3.400% notes due 2041	3,750		3,726
Verizon 3.550% notes due 2051	4,500		4,426
Verizon 3.700% notes due 2061	3,500		3,439
Verizon 0.375% notes due 2029 (3)	€	1,000	1,186
Verizon 0.750% notes due 2032 (3)	€	1,000	1,181
Verizon 1.125% notes due 2035 (3)	€	750	878
Verizon 2.375% notes due 2028 (3)	C$	1,000	800
Verizon 4.050% notes due 2051 (3)	C$	500	399
Verizon 2.350% notes due 2028 (3)	A$	600	463
Verizon 3.000% notes due 2031 (3)	A$	500	385
Verizon 3.850% notes due 2041 (3)	A$	150	116
Verizon 0.193% bonds due 2028 (3)	CHF	375	403
Verizon 0.555% bonds due 2031 (3)	CHF	325	349
Three Months Ended March 31, 2021 total			$	30,934
Three Months Ended September 30, 2021
Verizon 2.850% notes due 2041 (4)	$	1,000	$	991
Three Months Ended September 30, 2021 total	$	1,000	$	991
Nine Months Ended September 30, 2021 total			$	31,925

(1) Net proceeds were net of underwriting discounts and other issuance costs. In addition, for securities denominated in a currency other than the U.S. dollar, net proceeds are shown on a U.S. dollar equivalent basis.

(2) Compounded Secured Overnight Financing Rate (SOFR) is calculated using the SOFR Index published by the Federal Reserve Bank of New York in accordance with the terms of the notes. The Compounded SOFR for the interest period ending in September 2021 was 0.050%.

(3) See Note 8 for information on derivative transactions related to the issuances.

(4) An amount equal to the net proceeds from this green bond is expected to be used to fund, in whole or in part, certain renewable energy projects, including new and existing investments made by us during the period from December 1, 2020 through the maturity date of the green bond.

Asset-Backed Debt

As of September 30, 2021, the carrying value of our asset-backed debt was $9.4 billion. Our asset-backed debt includes Asset-Backed Notes (ABS Notes) issued to third-party investors (Investors) and loans (ABS Financing Facilities) received from banks and their conduit facilities (collectively, the Banks). Our consolidated asset-backed debt bankruptcy remote legal entities (each, an ABS Entity or collectively, the ABS

Entities) issue the debt or are otherwise party to the transaction documentation in connection with our asset-backed debt transactions. Under the terms of our asset-backed debt, Cellco Partnership (Cellco), a wholly-owned subsidiary of Verizon, and certain other affiliates of Verizon (collectively, the Originators) transfer device payment plan agreement receivables to one of the ABS Entities, which in turn transfers such receivables to another ABS Entity that issues the debt. Verizon entities retain the equity interests and residual interests, as applicable, in the ABS Entities, which represent the rights to all funds not needed to make required payments on the asset-backed debt and other related payments and expenses.

Our asset-backed debt is secured by the transferred device payment plan agreement receivables and future collections on such receivables. The device payment plan agreement receivables transferred to the ABS Entities and related assets, consisting primarily of restricted cash, will only be available for payment of asset-backed debt and expenses related thereto, payments to the Originators in respect of additional transfers of device payment plan agreement receivables, and other obligations arising from our asset-backed debt transactions, and will not be available to pay other obligations or claims of Verizon’s creditors until the associated asset-backed debt and other obligations are satisfied. The Investors or Banks, as applicable, which hold our asset-backed debt have legal recourse to the assets securing the debt, but do not have any recourse to Verizon with respect to the payment of principal and interest on the debt. Under a parent support agreement, Verizon has agreed to guarantee certain of the payment obligations of Cellco and the Originators to the ABS Entities.

Cash collections on the device payment plan agreement receivables collateralizing our asset-backed debt securities are required at certain specified times to be placed into segregated accounts. Deposits to the segregated accounts are considered restricted cash and are included in Prepaid expenses and other and Other assets in our condensed consolidated balance sheets.

Proceeds from our asset-backed debt transactions are reflected in Cash flows from financing activities in our condensed consolidated statements of cash flows. The asset-backed debt issued and the assets securing this debt are included in our condensed consolidated balance sheets.

ABS Notes

During the nine months ended September 30, 2021, we completed the following ABS Notes transactions:

(dollars in millions)	Interest Rates %	Expected Weighted-average Life to Maturity (in years)	Principal Amount Issued
May 2021
A Senior class notes	0.500	2.99	$	1,500
B Junior class notes	0.690	2.99	119
C Junior class notes	0.890	2.99	81
Total			$	1,700

Under the terms of each series of ABS Notes, there is a revolving period that is two years or up to three years, as applicable, during which we may transfer additional receivables to the ABS Entity. During the three and nine months ended September 30, 2021, we made aggregate principal repayments of $894 million and $2.4 billion, respectively, on ABS Notes that have entered the amortization period, including principal payments made in connection with clean-up redemptions.

ABS Financing Facility

In March 2021, we borrowed an additional $1.0 billion under the loan agreement outstanding in connection with the ABS Financing Facility. In May 2021, the aggregate outstanding balance of $1.5 billion was fully repaid and there was no outstanding balance under the ABS Financing Facility as of September 30, 2021.

Variable Interest Entities (VIEs)

The ABS Entities meet the definition of a VIE for which we have determined that we are the primary beneficiary as we have both the power to direct the activities of the entity that most significantly impact the entity’s performance and the obligation to absorb losses or the right to receive benefits of the entity. Therefore, the assets, liabilities and activities of the ABS Entities are consolidated in our financial results and are included in amounts presented on the face of our condensed consolidated balance sheets.

The assets and liabilities related to our asset-backed debt arrangements included in our condensed consolidated balance sheets were as follows:

	At September 30,		At December 31,
(dollars in millions)	2021		2020
Assets
Account receivable, net	$	8,845	$	9,257
Prepaid expenses and other	1,073		1,128
Other assets	3,309		2,950
Liabilities
Accounts payable and accrued liabilities	7		8
Debt maturing within one year	4,429		4,191
Long-term debt	4,996		6,413

See Note 7 for additional information on device payment plan agreement receivables used to secure asset-backed debt.

Long-Term Credit Facilities

				At September 30, 2021
(dollars in millions)	Maturities	Facility Capacity		Unused Capacity		Principal Amount Outstanding
Verizon revolving credit facility (1)	2024	$	9,500	$	9,413	N/A
Various export credit facilities (2)	2022 - 2029	7,500		530		$	4,823
Total		$	17,000	$	9,943	$	4,823

N/A - not applicable

(1) The revolving credit facility does not require us to comply with financial covenants or maintain specified credit ratings, and it permits us to borrow even if our business has incurred a material adverse change. The revolving credit facility provides for the issuance of letters of credit.

(2) During the nine months ended September 30, 2021, we drew down $470 million from these facilities. These credit facilities are used to finance equipment-related purchases. Borrowings under certain of these facilities amortize semi-annually in equal installments up to the applicable maturity dates. Maturities reflect maturity dates of principal amounts outstanding. Any amounts borrowed under these facilities and subsequently repaid cannot be reborrowed.

In September 2021, we submitted an irrevocable request to borrow the remaining $530 million available under our export credit facilities in November 2021.

Non-Cash Transactions

During the nine months ended September 30, 2021 and 2020, we financed, primarily through alternative financing arrangements, the purchase of approximately $337 million and $1.3 billion, respectively, of long-lived assets consisting primarily of network equipment. As of September 30, 2021 and December 31, 2020, $1.3 billion and $1.6 billion, respectively, relating to these financing arrangements, including those entered into in prior years and liabilities assumed through acquisitions, remained outstanding. These purchases are non-cash financing activities and therefore are not reflected within Capital expenditures in our condensed consolidated statements of cash flows.

Debt Extinguishment Losses

During both the three months ended September 30, 2021 and September 30, 2020, we did not record debt extinguishment losses. During the nine months ended September 30, 2021 and 2020, we recorded debt extinguishment losses of $1.1 billion and $102 million, respectively. The losses are recorded in Other income (expense), net in our condensed consolidated statements of income.

Guarantees

We guarantee the debentures of our operating telephone company subsidiaries. As of September 30, 2021, $765 million aggregate principal amount of these obligations remained outstanding. Each guarantee will remain in place for the life of the obligation unless terminated pursuant to its terms, including the operating telephone company no longer being a wholly-owned subsidiary of Verizon.

We also guarantee the debt obligations of GTE LLC as successor in interest to GTE Corporation that were issued and outstanding prior to July 1, 2003. As of September 30, 2021, $391 million aggregate principal amount of these obligations remained outstanding.

Covenants

We and our consolidated subsidiaries are in compliance with all of our restrictive covenants in our debt agreements.