Long-Term Debt

At December 31, 2016 and 2015, Altria Group, Inc.’s long-term debt consisted of the following:



(in millions)	2016		2015
Notes, 2.625% to 10.20%, interest payable semi-annually, due through 2046⁽¹⁾	$	13,839	$	12,789
Debenture, 7.75%, interest payable semi-annually, due 2027	42		42
Other	—		16
	13,881		12,847
Less current portion of long-term debt	—		4
	$	13,881	$	12,843

⁽¹⁾Weighted-average coupon interest rate of 4.9% and 5.5% at December 31, 2016 and 2015, respectively.

At December 31, 2016, aggregate maturities of Altria Group, Inc.’s long-term debt were as follows:



(in millions)
2018	$	864
2019	1,144
2020	1,000
2021	1,500
2022	1,900
Thereafter	7,609
	14,017
Less: debt issuance costs	77
debt discounts	59
	$	13,881

On January 1, 2016, Altria Group, Inc. adopted ASU No. 2015-03, which requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, rather than as a deferred charge (an asset). As a result of the adoption, $77 million of debt issuance costs have been presented on Altria Group, Inc.’s consolidated balance sheet at December 31, 2016 as a deduction from the carrying amount of long-term debt. In addition, $72 million of debt issuance costs were reclassified from other assets to long-term debt on Altria Group, Inc.’s consolidated balance sheet at December 31, 2015.

Altria Group, Inc.’s estimate of the fair value of its debt is based on observable market information derived from a third party pricing source and is classified in Level 2 of the fair value hierarchy. The aggregate fair value of Altria Group, Inc.’s total long-term debt at December 31, 2016 and 2015, was $15.1 billion and $14.5 billion, respectively, as compared with its carrying value of $13.9 billion and $12.8 billion, respectively.

▪Altria Group, Inc. Senior Notes: In September 2016, Altria Group, Inc. issued $0.5 billion aggregate principal amount of 2.625% senior unsecured long-term notes due 2026 and $1.5 billion aggregate principal amount of 3.875% senior unsecured long-term notes due 2046. Interest on these notes is payable semi-annually. The net proceeds from the issuance of these senior unsecured notes were added to Altria Group, Inc.’s general funds and were used to repurchase certain of its senior unsecured notes in connection with the 2016 debt tender offer described below and for other general corporate purposes, including voluntary contributions to Altria Group, Inc.’s pension plans.

The notes of Altria Group, Inc. are senior unsecured obligations and rank equally in right of payment with all of Altria Group, Inc.’s existing and future senior unsecured indebtedness. Upon the occurrence of both (i) a change of control of Altria Group, Inc. and (ii) the notes ceasing to be rated investment grade by each of Moody’s, Standard & Poor’s and Fitch Ratings Ltd. within a specified time period, Altria Group, Inc. will be required to make an offer to purchase the notes at a price equal to 101% of the aggregate principal amount of such notes, plus accrued and unpaid interest to the date of repurchase as and to the extent set forth in the terms of the notes.

With respect to $2.5 billion aggregate principal amount of Altria Group, Inc.’s senior unsecured long-term notes issued in 2008 and 2009, the interest rate payable on each series of notes was subject to adjustment from time to time if the rating assigned to the notes of such series by Moody’s or Standard & Poor’s was downgraded (or subsequently upgraded) as and to the extent set forth in the terms of the notes. As a result of credit rating upgrades by both Moody’s and Standard & Poor’s in the first quarter of 2016, this interest rate adjustment provision terminated in accordance with its terms.

The obligations of Altria Group, Inc. under the notes are guaranteed by PM USA as further discussed in Note 20. Condensed Consolidating Financial Information.

▪Debt Tender Offers and Redemption: During 2016 and 2015, Altria Group, Inc. completed debt tender offers to purchase for cash certain of its senior unsecured notes in aggregate principal amounts of $0.9 billion and $0.8 billion, respectively.

Details of these debt tender offers were as follows:



(in millions)	2016		2015
Notes Purchased
9.95% Notes due 2038	$	441	$	—
10.20% Notes due 2039	492		—
9.70% Notes due 2018	—		793
Total	$	933	$	793

During 2014, UST redeemed in full its $300 million (aggregate principal amount) 5.75% senior notes due 2018.

As a result of the Altria Group, Inc. debt tender offers and the UST debt redemption, pre-tax losses on early extinguishment of debt were recorded as follows:



(in millions)	2016		2015		2014
Premiums and fees	$	809	$	226	$	44
Write-off of unamortized debt discounts and debt issuance costs	14		2		—
Total	$	823	$	228	$	44