Debt

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Debt

Debt

Notes and Debentures

In May 2022, BNSF filed a new automatic shelf registration statement with the Securities and Exchange Commission (SEC) that became effective on May 6, 2022 and will remain effective for three years.

In June 2022, BNSF issued $1 billion of 4.45 percent debentures due January 15, 2053. The net proceeds from the sale of the debentures will be used for general corporate purposes, which may include but are not limited to working capital, capital expenditures, repayment of outstanding indebtedness, and distributions.

As of June 30, 2022, $1.55 billion remained authorized by the Board of Directors to be issued through the Securities and Exchange Commission debt shelf offering process.

The Company is required to maintain certain financial covenants in conjunction with $500 million of certain issued and outstanding junior subordinated notes. As of June 30, 2022, the Company was in compliance with these financial covenants.

Fair Value of Debt Instruments

As of June 30, 2022 and December 31, 2021, the fair value of BNSF’s debt, excluding finance leases, was $22.8 billion and $27.7 billion, respectively, while the book value, which also excludes finance leases, was $23.3 billion and $23.1 billion, respectively. The fair value of BNSF’s debt is primarily based on market value price models using observable market-based data for the same or similar issues, or on the estimated rates that would be offered to BNSF for debt of the same remaining maturities (Level 2 inputs).