Debt

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Debt

Debt

Notes and Debentures

In June 2024, the Registrant issued $1.3 billion of 5.5 percent debentures due March 15, 2055. 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, 2024, $1.65 billion remained authorized by the Board of Directors to be issued through the debt shelf offering process.

The Registrant is required to maintain certain financial covenants in conjunction with $500 million of certain issued and outstanding junior subordinated notes. As of June 30, 2024, the Registrant was in compliance with these financial covenants.

In June 2024, the Registrant conducted a consent solicitation from the holders of the 7.25% debentures due August 1, 2097 (the Covered Debt) to terminate the Replacement Capital Covenant associated with certain junior subordinated notes and related trust preferred securities. Under the terms of the Replacement Capital Covenant, the Registrant could only redeem or repurchase the junior subordinated notes or trust preferred securities prior to a specified date if it raised a specified amount of the funds from the sale of equity or equity-like securities. The Registrant received the requisite consents of the holders of the outstanding Covered Debt and, consequently, terminated the Replacement Capital Covenant as of June 26, 2024.

Fair Value of Debt Instruments

As of June 30, 2024 and December 31, 2023, the fair value of BNSF’s debt, excluding finance leases, was $22.0 billion and $22.4 billion, respectively, while the book value, which also excludes finance leases, was $24.1 billion and $23.4 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).