Debt and Derivatives

9 Months Ended

Sep. 30, 2024

Debt and Derivatives

Debt and Derivatives

3.    Debt and Derivatives

The following table summarizes the major components of debt at principal amounts as of each balance sheet date (in millions) and provides the maturities and interest rate ranges of each major category as of September 30, 2024:

	September 30,		December 31,
	2024		2023
Commercial paper program (weighted average interest rate of 5.6% as of December 31, 2023)	$	—	$	860
Senior notes, maturing through 2050, interest rates ranging from 0.75% to 7.75% (weighted average interest rate of 3.9% as of September 30, 2024 and 3.7% as of December 31, 2023)		12,720		11,376
Canadian senior notes, C$500 million maturing September 2026, interest rate of 2.6%		370		378
Tax-exempt bonds, maturing through 2053, fixed and variable interest rates ranging from 0.70% to 5.0% (weighted average interest rate of 3.7% as of September 30, 2024 and 3.3% as of December 31, 2023)		2,823		2,883
Financing leases and other, maturing through 2082 (weighted average interest rate of 4.9% as of September 30, 2024 and 5.0% as of December 31, 2023) (a)		865		855
Debt issuance costs, discounts and other		(125)		(123)
		16,653		16,229
Current portion of long-term debt		676		334
Long-term debt, less current portion	$	15,977	$	15,895

(a) Excluding our landfill financing leases, the maturities of our financing leases and other debt obligations extend through 2059.

Debt Classification

As of September 30, 2024, we had approximately $1.9 billion of debt maturing within the next 12 months, including  (i) $1.2 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities; (ii) $422 million of 3.125% senior notes that mature in March 2025 and (iii) $254 million of other debt with scheduled maturities within the next 12 months, including $110 million of tax-exempt bonds. As of September 30, 2024, we have classified $1.2 billion of debt maturing in the next 12 months as long-term because we have the intent and ability to refinance these borrowings on a long-term basis as supported by the forecasted available capacity under our $3.5 billion long-term U.S. and Canadian revolving credit facility (“$3.5 billion revolving credit facility”). The remaining $676 million of debt maturing in the next 12 months is classified as current obligations.

Access to and Utilization of Credit Facilities and Commercial Paper Program

Term Credit Agreement Up to $7.2 Billion — On August 28, 2024, the Company entered into a delayed draw Term Credit Agreement in a principal amount of up to $7.2 billion (the “Term Credit Agreement”). Borrowings under our Term Credit Agreement may be used to pay all or a portion of the consideration for our pending acquisition of Stericycle; to pay, prepay or otherwise refinance certain indebtedness of Stericycle; and/or to pay fees and expenses incurred in connection with the acquisition and the Term Credit Agreement. The maturity date of borrowings under the Term Credit Agreement shall be the first business day that is 364 days after the date that borrowings are received (the “Funding Date”). WM Holdings, a wholly-owned subsidiary of WMI, guarantees all of the obligations under the Term Credit Agreement.

Borrowings under the Term Credit Agreement will bear interest at a base rate or the secured overnight financing rate (“SOFR”) administered by the Federal Reserve Bank of New York, plus an applicable spread depending on our senior public debt rating assigned by Moody’s Investors Service, Inc. and Standard and Poor’s Global Ratings. The spread above SOFR can range from 0.90% to 1.250% per annum and the spread for base rate loans can range from zero to 0.250% per annum. We also pay certain other fees set forth in the Term Credit Agreement, including (a) a ticking fee accruing on the aggregate lending commitments from August 28, 2024 to the earlier of the Funding Date or the termination or expiration of the lending commitments under the Term Credit Agreement; (b) extension fees on the aggregate lending commitments in effect on June 3, 2025 and December 31, 2025; and (c) duration fees on the aggregate principal amount of borrowings outstanding on December 31, 2024, December 31, 2025 and at the end of each fiscal quarter. As of September 30, 2024, there were no outstanding borrowings under our Term Credit Agreement and the ticking fee in effect was 0.065% per annum.

$3.5 Billion Revolving Credit Facility — In May 2024, we amended and restated our $3.5 billion U.S. and Canadian revolving credit facility, extending the term through May 2029. The agreement includes a $1.0 billion accordion feature that may be used to increase total capacity in future periods, and we have the option to request up to two one-year extensions. Waste Management of Canada Corporation and WM Quebec Inc., each an indirect wholly-owned subsidiary of WMI, are borrowers under the $3.5 billion revolving credit facility, and the agreement permits borrowing in Canadian dollars up to the U.S. dollar equivalent of $375 million, with such borrowings to be repaid in Canadian dollars. WM Holdings guarantees all the obligations under the $3.5 billion revolving credit facility. 

The $3.5 billion revolving credit facility provides us with credit capacity to be used for cash borrowings, to support letters of credit and to support our commercial paper program. The interest rates we pay on outstanding U.S. or Canadian loans are based on SOFR or the Canadian Overnight Repo Rate Average (“CORRA”) administered by the Bank of Canada, respectively, plus a spread depending on our senior public debt rating assigned by Moody’s Investors Service, Inc. and Standard and Poor’s Global Ratings. The spread above SOFR or CORRA can range from 0.585% to 1.025% per annum, plus applicable credit adjustments. We also pay certain other fees set forth in the $3.5 billion revolving credit facility agreement, including a facility fee based on the aggregate commitment, regardless of usage. As of September 30, 2024, we had no outstanding borrowings under this facility. We had $171 million of letters of credit issued and no outstanding borrowings under our commercial paper program, both supported by the facility, leaving unused and available credit capacity of $3.3 billion as of September 30, 2024.

Commercial Paper Program — We have a commercial paper program that enables us to borrow funds for up to 397 days at competitive interest rates. The rates we pay for outstanding borrowings are based on the term of the notes. The commercial paper program is fully supported by our $3.5 billion revolving credit facility. In July 2024, we issued $1.5 billion of new senior notes and used the proceeds primarily to repay outstanding commercial paper borrowings. As of September 30, 2024, we had no outstanding borrowings under our commercial paper program.  

Other Letter of Credit Lines — As of September 30, 2024, we had utilized $863 million of other uncommitted letter of credit lines with terms maturing through December 2027.

Debt Borrowings and Repayments

Commercial Paper Program — During the nine months ended September 30, 2024, we made cash repayments of $10.3 billion, which were partially offset by $9.4 billion of cash borrowings (net of related discount on issuance).

Senior Notes — During the nine months ended September 30, 2024, WMI issued $750 million of 4.950% senior notes due 2027 and $750 million of 4.950% senior notes due 2031, the net proceeds of which were $1.5 billion. The net proceeds were used primarily to reduce outstanding borrowings under our commercial paper program. During the nine months ended September 30, 2024, we repaid $156 million of WMI’s 3.5% senior notes upon maturity in May 2024.

Derivatives

Treasury Locks — We use treasury lock agreements to hedge our exposure to interest rate changes and to reduce the volatility of financing costs on expected future debt issuances. Each of our treasury lock transactions was designated as a cash flow hedge of the interest payments associated with an anticipated debt issuance. During the third quarter of 2024, we entered into treasury lock transactions to fix the ten-year treasury rate on an aggregate notional amount of $900 million. We also entered into treasury lock transactions to fix the thirty-year treasury rate on an aggregate notional amount of $650 million. As of September 30, 2024, we recognized an unrealized loss of $35 million within accumulated other comprehensive (loss) income and an associated derivative liability reflected within accrued liabilities on the Company’s Condensed Consolidated Balance Sheets related to these cash flow hedges. Upon termination, these derivatives will be amortized to earnings as a component of interest expense over the full term of each issuance.