Debt

We classify our debt based on the contractual maturity dates of the underlying debt instruments. We defer costs associated with debt issuance over the applicable term. These costs are then amortized as interest expense in our accompanying consolidated statements of income using the effective interest rate method. The following table provides detail on the principal amount of our outstanding debt as of June 30, 2014 and December 31, 2013. The table amounts exclude all debt fair value adjustments, including debt discounts and premiums (in millions).



	June 30, 2014			December 31, 2013
KMEP borrowings:
Senior notes, 2.65% through 9.00%, due 2014 through 2044(a)	$	17,100		$	15,600
Commercial paper borrowings(b)	513			979
Credit facility due May 1, 2018(c)	—			—
Subsidiary borrowings (as obligor):
TGP - Senior Notes, 7.00% through 8.375%, due 2016 through 2037	1,790			1,790
EPNG - Senior Notes, 5.95% through 8.625%, due 2017 through 2032	1,115			1,115
Copano - Senior Notes, 7.125%, due April 1, 2021	332			332
Other miscellaneous subsidiary debt	97			98
Total debt	20,947			19,914
Less: Current portion of debt(d)	(1,337		)	(1,504		)
Total long-term debt(e)	$	19,610		$	18,410

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(a)	All of our fixed rate senior notes provide that we may redeem the notes at any time at a price equal to 100% of the principal amount of the notes plus accrued interest to the redemption date plus a make-whole premium.

(b)

As of both June 30, 2014 and December 31, 2013, the average interest rate on our outstanding commercial paper borrowings was 0.28%. The borrowings under our commercial paper program were used principally to finance the acquisitions and capital expansions, and in the near term, we expect that our short-term liquidity and financing needs will be met primarily through borrowings made under our commercial paper program.


(c)	See “—Credit Facilities” below.


(d)	Amounts include outstanding commercial paper borrowings, discussed above in footnote (b).

(e)

As of June 30, 2014 and December 31, 2013, our “Debt fair value adjustments” increased our debt balances by $1,267 million and $1,214 million, respectively. In addition to all unamortized debt discount/premium amounts and purchase accounting on our debt balances, our debt fair value adjustments also include (i) amounts associated with the offsetting entry for hedged debt; and (ii) any unamortized portion of proceeds received from the early termination of interest rate swap agreements. For further information about our debt fair value adjustments, see Note 5 “Risk Management—Debt Fair Value Adjustments.”

Credit Facilities

As of both June 30, 2014 and December 31, 2013, we had no borrowings under our $2.7 billion five-year senior unsecured revolving credit facility maturing May 1, 2018. Borrowings under our revolving credit facility can be used for general partnership purposes and as a backup for our commercial paper program. Similarly, borrowings under our commercial paper program reduce the borrowings allowed under our credit facility.

We had, as of June 30, 2014, $1,807 million of borrowing capacity available under our credit facility. The amount available for borrowing under our credit facility was reduced by a combined amount of $893 million, consisting of (i) $513 million of commercial paper borrowings; (ii) $205 million of letters of credit; and (iii) $175 million related to a capital contribution commitment to one of our unconsolidated subsidiaries. For more information, see Note 8 “Related Party Transactions.”

Changes in Debt

On January 15, 2014, in anticipation of our APT acquisition, we entered into a short-term unsecured liquidity facility with us as borrower, and UBS as administrative agent. This liquidity facility provided for borrowings of up to $1.0 billion from a syndicate of financial institutions and was scheduled to mature on July 15, 2014. Additionally, in conjunction with the establishment of this liquidity facility, we increased our commercial paper program to provide for the issuance of up to $3.7 billion (up from $2.7 billion). We made no borrowings under this liquidity facility, and after receiving the cash proceeds from both our February 2014 public offering of senior notes (described following) and our February 2014 public offering of common units (described in Note 4 “Partners’ Capital—Equity Issuances”), we terminated the liquidity facility and decreased our commercial paper program to again provide for the issuance of up to $2.7 billion.

On February 24, 2014, we completed a public offering of a total $1.5 billion in principal amount of senior notes in two separate series. We received net proceeds of $743 million from the offering of $750 million in principal amount of 3.50% senior notes due March 1, 2021, and $739 million from the offering of $750 million in principal amount of 5.50% senior notes due March 1, 2044. We used the proceeds from our February 2014 debt offering to reduce the borrowings under our commercial paper program (reducing the incremental commercial paper borrowings we made in January 2014 to fund our APT acquisition).