8. DEBT

The following table presents the primary components of our outstanding indebtedness with third parties and the weighted average interest rates associated with each component as of March 31, 2016, before the effect of our interest rate hedging activities. Our indebtedness with related parties is discussed in Note 10. Related Party Transactions.


	Interest Rate			March 31, 2016			December 31, 2015
				(in millions)
EEP debt obligations:
Commercial Paper⁽¹⁾		1.378	%	$	189.7		$	326.1
Credit Facilities due 2017 – 2020		1.686	%		1,565.0			1,110.0
Senior Notes due December 2016		5.875	%		300.0			300.0
Senior Notes due April 2018		6.500	%		400.0			400.0
Senior Notes due March 2019		9.875	%		500.0			500.0
Senior Notes due March 2020		5.200	%		500.0			500.0
Senior Notes due October 2020		4.375	%		500.0			500.0
Senior Notes due September 2021		4.200	%		600.0			600.0
Senior Notes due October 2025		5.875	%		500.0			500.0
Senior Notes due June 2033		5.950	%		200.0			200.0
Senior Notes due December 2034		6.300	%		100.0			100.0
Senior Notes due April 2038		7.500	%		400.0			400.0
Senior Notes due September 2040		5.500	%		550.0			550.0
Senior Notes due October 2045		7.375	%		600.0			600.0
Junior subordinated notes due 2067		8.050	%		400.0			400.0
OLP debt obligations:
Senior Notes due October 2018		7.000	%		100.0			100.0
Senior Notes due October 2028		7.125	%		100.0			100.0
MEP debt obligations:
MEP Credit Agreement		2.691	%		440.0			490.0
MEP Series A Senior Notes due September 2019		3.560	%		75.0			75.0
MEP Series B Senior Notes due September 2021		4.040	%		175.0			175.0
MEP Series C Senior Notes due September 2024		4.420	%		150.0			150.0
Total principal amount of debt obligations					8,344.7			8,076.1
Other:
Unamortized discount					(6.0	)		(6.2	)
Current maturities of long-term debt					(300.0	)		(300.0	)
Unamortized debt issuance costs					(41.0	)		(41.5	)
Total long term debt				$	7,997.7		$	7,728.4

⁽¹⁾

Individual issuances of commercial paper generally mature in 90 days or less, but are supported by our Credit Facilities and are therefore considered long-term debt.

On January 1, 2016, we adopted Accounting Standards Update No. 2015-03, which requires us to present debt issuance costs in the balance sheet as a reduction to the carrying amount of the debt liability, rather than as an asset. We have retrospectively adopted this guidance for all periods presented. The adoption of this guidance did not have a material impact on our consolidated financial statements.

Interest Cost

Our interest cost for the three months ended March 31, 2016, and 2015, is comprised of the following:


	For the three months ended March 31,
	2016		2015
	(in millions)
Interest cost incurred⁽¹⁾	$	122.0	$	60.5
Less: Interest capitalized		9.1		12.2
Interest expense	$	112.9	$	48.3

⁽¹⁾

Interest cost incurred increased period-over-period, due to an increase in our average outstanding debt balances outstanding and in part due to a decrease in unrealized losses for the three months ended March 31, 2015, that did not occur during the same period in 2016.

Credit Facilities and Commercial Paper

Our multi-year senior unsecured revolving credit facility, which we refer to as the Credit Facility, permits aggregate borrowings of up to, at any one time outstanding, $1.975 billion, a letter of credit subfacility and a swing line subfacility. The Credit Facility matures September 26, 2020; however, $175.0 million of commitments will expire on the original maturity date of September 26, 2018.

Our 364-day revolving credit agreement, which we refer to as the 364-Day Credit Facility, permits aggregate borrowings of up to $625.0 million: (1) on a revolving basis for a 364-day period, extendible annually at the lenders’ discretion, and (2) for a 364-day term on a non-revolving basis following the expiration of all revolving periods. The current revolving credit termination date is July 1, 2016.

At March 31, 2016, the Credit Facility and 364-Day Credit Facility, together referred to as the Credit Facilities, provide an aggregate amount of approximately $2.6 billion of bank credit, which we use to fund our general activities and working capital needs. The amounts we may borrow under the terms of our Credit Facilities are reduced by the face amount of our letters of credit outstanding. During the three months ended March 31, 2016, we had net borrowings of $455.0 million, which includes gross borrowings of $2,995.0 million and gross repayments of $2,540.0 million.

We are party to an uncommitted letter of credit arrangement, pursuant to which the lender may, on a discretionary basis and with no commitment, agree to issue standby letters of credit upon our request. The aggregate amount of this uncommitted letter of credit is not to exceed $175.0 million. While the letter of credit arrangement is uncommitted and issuance of letters of credit is at the lender’s sole discretion, we view this arrangement as a liquidity enhancement as it allows us to potentially reduce our reliance on utilizing our committed Credit Facilities for issuance of letters of credit to support our hedging activities.

Our commercial paper program provides for the issuance of up to an aggregate principal amount of $1.5 billion of commercial paper and is supported by our Credit Facilities. We access the commercial paper market primarily to provide temporary financing for our operating activities, capital expenditures and acquisitions when the available interest rates we can obtain are lower than the rates available under our Credit Facilities. During the three months ended March 31, 2016, we had net repayments of approximately $136.4 million, which includes gross borrowings of $3,071.7 million and gross repayments of $3,208.1 million. Our policy is to limit the amount of commercial paper we can issue by the amounts available under our Credit Facility up to an aggregate principal amount of $1.5 billion.

Our policy is to maintain availability at any time under our Credit Facilities amounts that are at least equal to the amount of commercial paper that we have outstanding at any time.

At March 31, 2016, we had approximately $645.5 million available under the terms of our Credit Facilities, determined as follows:


	(in millions)
Total credit available under our Credit Facilities	$	2,600.0
Less: Amounts outstanding under our Credit Facilities		1,565.0
Principal amount of commercial paper outstanding		189.7
Letters of credit outstanding		199.8
Total amount available at March 31, 2016	$	645.5

MEP Credit Agreement

MEP, Midcoast Operating, and their material subsidiaries are party to a senior revolving credit facility, which we refer to as the MEP Credit Agreement, which permits aggregate borrowings of up to $810.0 million, at any one time outstanding. The original term of the MEP Credit Agreement was three years with an initial maturity date of November 13, 2016, subject to four one-year requests for extensions. The MEP Credit Agreement’s current maturity date is September 30, 2018; however, $140.0 million of commitments expire on the original maturity date of November 13, 2016, and an additional $25.0 million of commitments expire on September 30, 2017. During the three months ended March 31, 2016, MEP had net repayments of approximately $50.0 million, which includes gross borrowings of $1,585.0 million and gross repayments of $1,635.0 million.

Debt Covenants

As of March 31, 2016, we and our consolidated subsidiaries were in compliance with the terms of our financial covenants under our consolidated debt agreements.

Fair Value of Debt Obligations

The carrying amounts of our outstanding commercial paper, borrowings under our Credit Facilities, and the MEP Credit Agreement approximate their fair values at March 31, 2016, and December 31, 2015, respectively, due to the short-term nature and frequent repricing of the amounts outstanding under these obligations. The fair value of our outstanding commercial paper and borrowings under our Credit Facilities and the MEP Credit Agreement are included with our long-term debt obligations since we have the ability and the intent to refinance the amounts outstanding on a long-term basis.

The approximate fair value of our fixed-rate debt obligations was $6.0 billion and $5.9 billion at March 31, 2016, and December 31, 2015, respectively. We determined the approximate fair values using a standard methodology that incorporates pricing points that are obtained from independent, third-party investment dealers who actively make markets in our debt securities. We use these pricing points to calculate the present value of the principal obligation to be repaid at maturity and all future interest payment obligations for any debt outstanding. The fair value of our long-term debt obligations is categorized as Level 2 within the fair value hierarchy.