Debt and Financing Activities

9 Months Ended

Dec. 31, 2020

Long-term debt consisted of the following:


(In millions)	December 31, 2020		March 31, 2020
U.S. Dollar notes (1) (2)
3.65% Notes due November 30, 2020	$	—	$	700
4.75% Notes due March 1, 2021	—		323
2.70% Notes due December 15, 2022	400		400
2.85% Notes due March 15, 2023	400		400
3.80% Notes due March 15, 2024	1,100		1,100
0.90% Notes due December 3, 2025	500		—
7.65% Debentures due March 1, 2027	167		167
3.95% Notes due February 16, 2028	600		600
4.75% Notes due May 30, 2029	400		400
6.00% Notes due March 1, 2041	282		282
4.88% Notes due March 15, 2044	411		411
Foreign currency notes (1) (3)
0.63% Euro Notes due August 17, 2021	733		662
1.50% Euro Notes due November 17, 2025	729		659
1.63% Euro Notes due October 30, 2026	611		552
3.13% Sterling Notes due February 17, 2029	639		557

Lease and other obligations	272		174
Total debt	7,244		7,387
Less: Current portion	777		1,052
Total long-term debt	$	6,467	$	6,335

(1)These notes are unsecured and unsubordinated obligations of the Company.

(2)Interest on these notes is payable semi-annually.

(3)Interest on these foreign currency notes is payable annually.

Long-Term Debt

The Company’s long-term debt includes both U.S. dollar and foreign currency-denominated borrowings. Debt outstanding totaled $7.2 billion and $7.4 billion at December 31, 2020 and March 31, 2020, respectively, of which $777 million and $1.1 billion, respectively, was included under the caption “Current portion of long-term debt” within the Company’s Condensed Consolidated Balance Sheets.

On December 3, 2020, the Company completed a public offering of 0.90% Notes due December 3, 2025 (the “2025 Notes”) in a principal amount of $500 million. Interest on the 2025 Notes is payable semi-annually on June 3rd and December 3rd of each year, commencing on June 3, 2021. Proceeds received from this note issuance, net of discounts and offering expenses, were $496 million.

The 2025 Notes, which constitutes a “Series,” are an unsecured and unsubordinated obligation of the Company and rank equally with all of the Company’s existing, and from time-to-time, future unsecured and unsubordinated indebtedness outstanding. The 2025 Notes are governed by materially similar indentures and officers’ certificates as those of other Series issued by the Company. Upon required notice to holders of notes with fixed interest rates, the Company may redeem those notes at any time prior to maturity, in whole or in part, for cash at redemption prices. In the event of the occurrence of both (1) a change of control of the Company and (2) a downgrade of a Series below an investment grade rating by each of Fitch Inc., Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services within a specified period, an offer must be made to purchase the 2025 Notes from the holders at a price equal to 101% of the then outstanding principal amount of the 2025 Notes, plus accrued and unpaid interest to, but not including, the date of repurchase. The indenture and the related officers’ certificate for the 2025 Note, subject to the exceptions and in compliance with the conditions as applicable, specify that the Company may not consolidate, merge or sell all or substantially all of its assets, incur liens, or enter into sale-leaseback transactions exceeding specific terms, without lenders’ consent. The indentures also contain customary events of default provisions.

During the three and nine months ended December 31, 2020, the Company retired its $700 million total principal amount of notes due on November 30, 2020 at a fixed interest rate of 3.65% upon maturity. On December 1, 2020, the Company redeemed its 4.75% $323 million total principal of notes due on March 1, 2021 prior to maturity. These notes were redeemed using cash on hand and the proceeds of the notes offering discussed above.

Revolving Credit Facilities

McKesson maintains a syndicated $4 billion five-year senior unsecured credit facility, dated as of September 25, 2019, as amended (the “2020 Credit Facility”), which has a $3.6 billion aggregate sublimit of availability in Canadian dollars, British pound sterling and Euro. The 2020 Credit Facility matures in September 2024 and had no borrowings during the three and nine months ended December 31, 2020 and no amounts outstanding as of December 31, 2020 and March 31, 2020. The remaining terms and conditions of the 2020 Credit Facility are substantially similar to those previously in place under the $3.5 billion five-year senior unsecured revolving credit facility (the “Global Facility”), which was scheduled to mature in October 2020. The Global Facility was terminated in connection with the execution of the 2020 Credit Facility in September 2019.

Borrowings under the 2020 Credit Facility bear interest based upon the London Interbank Offered Rate (“LIBOR”), Canadian Dealer Offered Rate for credit extensions denominated in Canadian dollars, a prime rate, or alternative overnight rates as applicable, plus agreed margins. The 2020 Credit Facility contains financial covenants which obligate the Company to maintain a maximum debt to capital ratio, as defined in the 2020 Credit Facility, along with other customary investment grade covenants. If the Company does not comply with these covenants, its ability to use the 2020 Credit Facility may be suspended and repayment of any outstanding balances under the 2020 Credit Facility may be required. As of December 31, 2020, the Company was in compliance with all covenants.

The Company also maintains bilateral credit facilities primarily denominated in Euro with a committed amount of $8 million and an uncommitted amount of $183 million as of December 31, 2020. Borrowings and repayments were not material during the three and nine months ended December 31, 2020 and 2019, and amounts outstanding under these credit lines were not material as of December 31, 2020 and March 31, 2020.

Commercial Paper

The Company maintains a commercial paper program to support its working capital requirements and for other general corporate purposes. Under the program, the Company can issue up to $4.0 billion in outstanding commercial paper notes. During the nine months ended December 31, 2020 and 2019, the Company borrowed $5.5 billion and $15.9 billion, respectively, and repaid $5.3 billion and $13.7 billion, respectively, under the program. At December 31, 2020 there were $152 million of commercial paper notes outstanding with a weighted average interest rate of 0.21%. At March 31, 2020, there were no commercial paper notes outstanding.