7. Long-Term Debt

At Dec. 31, 2015, total long-term debt had a carrying amount of $3,850.2 million and an estimated fair market value of $4,061.6 million. At Dec. 31, 2014, total long-term debt had a carrying amount of $3,628.5 million and an estimated fair market value of $3,987.8 million. The company uses the market approach in determining fair value. The majority of the outstanding debt is valued using real-time financial market data obtained from Bloomberg Professional Service. The remaining securities are valued using prices obtained from the Municipal Securities Rulemaking Board and by applying estimated credit spreads obtained from a third party to the par value of the security. All debt securities are Level 2 instruments.

TECO Finance is a wholly owned subsidiary of TECO Energy. TECO Finance’s sole purpose is to raise capital for TECO Energy’s diversified businesses. TECO Energy is a full and unconditional guarantor of TECO Finance’s securities, and no subsidiaries of TECO Energy guarantee TECO Finance’s securities.

A substantial part of Tampa Electric’s tangible assets are pledged as collateral to secure its first mortgage bonds. There are currently no bonds outstanding under Tampa Electric’s first mortgage bond indenture.

TECO Energy’s gross maturities and annual sinking fund requirements of long-term debt for 2016 through 2020 and thereafter are as follows:

Long-Term Debt Maturities

													Total
As of Dec. 31, 2015													Long-Term
(millions)	2016		2017		2018		2019		2020		Thereafter		Debt
TECO Finance	$	250.0	$	300.0	$	250.0	$	0.0	$	300.0	$	0.0	$	1,100.0
Tampa Electric		83.3		0.0		254.2		0.0		0.0		1,666.7		2,004.2
PGS		0.0		0.0		50.0		0.0		0.0		211.7		261.7
NMGC		0.0		0.0		0.0		0.0		0.0		270.0		270.0
NMGI		0.0		0.0		0.0		50.0		0.0		150.0		200.0
Total long-term debt maturities	$	333.3	$	300.0	$	554.2	$	50.0	$	300.0	$	2,298.4	$	3,835.9

Issuance of TECO Finance Floating Rate Notes due 2018

On Apr. 10, 2015, TECO Finance completed an offering of $250 million aggregate principal amount of floating rate notes due 2018 (the 2018 Notes), which are guaranteed by TECO Energy. The 2018 Notes were sold at par and mature on Apr. 10, 2018. The 2018 Notes bear interest at a floating rate that is reset quarterly based on the three-month LIBOR plus 60 basis points. The 2018 Notes are not subject to redemption prior to maturity. The 2018 Notes are effectively subordinated to existing and future liabilities of TECO Energy’s subsidiaries to their respective creditors, and also are effectively subordinated to any secured debt that TECO Finance and TECO Energy incur to the extent of the value of the assets securing that indebtedness.

The offering resulted in net proceeds to TECO Finance (after deducting underwriting discounts and commissions and estimated offering expenses) of approximately $248.6 million. TECO Finance used these net proceeds to repay borrowings under the TECO Finance credit facility and to fund a portion of the payment of $191 million of TECO Finance notes that matured in May 2015.

Issuance of Tampa Electric Company 4.20% Notes due 2045

On May 20, 2015, TEC completed an offering of $250 million aggregate principal amount of 4.20% Notes due May 15, 2045 (the TEC 2015 Notes). The TEC 2015 Notes were sold at 99.814% of par. The offering resulted in net proceeds to TEC (after deducting underwriting discounts, commissions, estimated offering expenses and before settlement of interest rate swaps) of approximately $246.8 million. Net proceeds were used to repay short-term debt and for general corporate purposes. Until Nov. 15, 2044, TEC may redeem all or any part of the TEC 2015 Notes at its option at any time and from time to time at a redemption price equal to the greater of (i) 100% of the principal amount of the TEC 2015 Notes to be redeemed or (ii) the sum of the present value of the remaining payments of principal and interest on the TEC 2015 Notes to be redeemed, discounted at an applicable treasury rate (as defined in the indenture), plus 20 basis points; in either case, the redemption price would include accrued and unpaid interest to the redemption date. At any time on or after Nov. 15, 2044, TEC may, at its option, redeem the TEC 2015 Notes, in whole or in part, at 100% of the principal amount of the TEC 2015 Notes being redeemed plus accrued and unpaid interest thereon to but excluding the date of redemption.

Issuance of Tampa Electric Company 4.35% Notes due 2044

On May 15, 2014, TEC completed an offering of $300 million aggregate principal amount of 4.35% Notes due 2044 (the TEC 2014 Notes). The TEC 2014 Notes were sold at 99.933% of par. The offering resulted in net proceeds to TEC (after deducting underwriting discounts, commissions, estimated offering expenses and before settlement of interest rate swaps) of approximately $296.6 million. Net proceeds were used to repay short-term debt and for general corporate purposes. TEC may redeem all or any part of the TEC 2014 Notes at its option at any time and from time to time before Nov. 15, 2043 at a redemption price equal to the greater of (i) 100% of the principal amount of TEC 2014 Notes to be redeemed or (ii) the sum of the present value of the remaining payments of principal and interest on the notes to be redeemed, discounted at an applicable treasury rate (as defined in the indenture), plus 15 basis points; in either case, the redemption price would include accrued and unpaid interest to the redemption date. At any time on or after Nov. 15, 2043, TEC may at its option redeem the TEC 2014 Notes, in whole or in part, at 100% of the principal amount of the notes being redeemed plus accrued and unpaid interest thereon to but excluding the date of redemption.

Issuance of New Mexico Gas Intermediate Senior Unsecured Notes

On Sept. 2, 2014, NMGI completed an offering of $50 million aggregate principal amount of 2.71% Series A Senior Unsecured Notes due July 30, 2019 (the NMGI Series A 2014 Notes) and $150 million aggregate principal amount of 3.64% Series B Senior Unsecured Notes due July 30, 2024 (the NMGI Series B 2014 Notes and, with the NMGI Series A 2014 Notes, the NMGI 2014 Notes). The NMGI 2014 Notes were sold at 100% of par. The offering resulted in net proceeds to NMGI (after deducting underwriting discounts, commissions and estimated offering expenses) of approximately $198.4 million. Net proceeds were used to repay existing indebtedness and for general corporate purposes. NMGI may redeem all or any part of the NMGI 2014 Notes at its option at any time and from time to time at a redemption price equal to the greater of (i) 100% of the principal amount of NMGI 2014 Notes to be redeemed or (ii) the sum of the present value of the remaining payments of principal and interest on the NMGI notes to be redeemed, discounted at an applicable reinvestment yield (as defined in the note purchase agreement), plus 50 basis points; in either case, the redemption price would include accrued and unpaid interest to the redemption date. The NMGI 2014 Notes were issued in a private placement that was not subject to the registration requirements of the Securities Act of 1933.

Issuance of New Mexico Gas Company Senior Unsecured 3.54 % Notes due 2026

On Sept. 2, 2014, NMGC completed an offering of $70 million aggregate principal amount of 3.54% Senior Unsecured Notes due July 30, 2026 (the NMGC 2014 Notes). The NMGC 2014 Notes were sold at 100% of par. The offering resulted in net proceeds to NMGC (after deducting underwriting discounts, commissions and estimated offering expenses) of approximately $69.3 million. Net proceeds were used to repay existing indebtedness and for general corporate purposes. NMGC may redeem all or any part of the NMGC 2014 Notes at its option at any time and from time to time at a redemption price equal to the greater of (i) 100% of the principal amount of NMGC 2014 Notes to be redeemed or (ii) the sum of the present value of the remaining payments of principal and interest on the notes to be redeemed, discounted at an applicable reinvestment yield (as defined in the note purchase agreement), plus 50 basis points; in either case, the redemption price would include accrued and unpaid interest to the redemption date. The NMGC 2014 Notes were issued in a private placement that was exempt from the registration requirements of the Securities Act of 1933.

Amendment of New Mexico Gas Company 4.87 % Notes due 2021

On Feb. 8, 2011, NMGC issued secured notes in an aggregate principal amount of $200 million (NMGC 2011 Notes), maturing Feb. 8, 2021. The NMGC 2011 Notes were issued in a private placement that was exempt from the registration requirements of the Securities Act of 1933.

On July 16, 2014, NMGC received approvals from the noteholders of the NMGC 2011 Notes to release the collateral securing the NMGC 2011 Notes by amending the existing note purchase agreement. The amendments to the note purchase agreement were subject to the approval of the NMPRC, and on Oct. 22, 2014, NMGC received the required NMPRC approval of the amendments. On Oct. 30, 2014, the amendments became effective, the collateral securing the NMGC 2011 Notes was released and other technical changes were made to the NMGC 2011 Notes.

Purchase in Lieu of Redemption of Revenue Refunding Bonds

On Mar. 15, 2012, TEC purchased in lieu of redemption $86.0 million HCIDA Pollution Control Revenue Refunding Bonds (Tampa Electric Company Project), Series 2006 (Non-AMT) (the Series 2006 HCIDA Bonds). On Mar. 19, 2008, the HCIDA had remarketed the Series 2006 HCIDA Bonds in a term-rate mode pursuant to the terms of the Loan and Trust Agreement governing those bonds. The Series 2006 HCIDA Bonds bore interest at a term rate of 5.00% per annum from Mar. 19, 2008 to Mar. 15, 2012. TEC is responsible for payment of the interest and principal associated with the Series 2006 HCIDA Bonds. Regularly scheduled principal and interest when due, are insured by Ambac Assurance Corporation.

On Sept. 3, 2013, TEC purchased in lieu of redemption $51.6 million HCIDA Pollution Control Revenue Refunding Bonds (Tampa Electric Company Project), Series 2007 B (the Series 2007 B HCIDA Bonds). On Mar. 26, 2008, the HCIDA had remarketed the Series 2007 B HCIDA Bonds in a term-rate mode pursuant to the terms of the Loan and Trust Agreement governing those bonds. The Series 2007 B HCIDA Bonds bore interest at a term rate of 5.15% per annum from Mar. 26, 2008 to Sept. 1, 2013. TEC is responsible for payment of the interest and principal associated with the Series 2007 B HCIDA Bonds.

As of Dec. 31, 2015, $232.6 million of bonds purchased in lieu of redemption were held by the trustee at the direction of TEC to provide an opportunity to evaluate refinancing alternatives.

At Dec. 31, 2015 and 2014, TECO Energy had the following long-term debt outstanding:

Long-Term Debt
(millions)		Due	2015		2014
TECO Finance	Notes ⁽¹⁾⁽²⁾ : 6.75% ⁽³⁾	2015	$	0.0	$	191.2
	4.00% ⁽³⁾	2016		250.0		250.0
	6.57% ⁽³⁾	2017		300.0		300.0
	Floating rate notes	2018		250.0		0.0
	5.15% ⁽³⁾	2020		300.0		300.0
	Total long-term debt of TECO Finance			1,100.0		1,041.2
Tampa Electric	Installment contracts payable ⁽⁴⁾:
	5.65% Refunding bonds	2018		54.2		54.2
	Variable rate bonds repurchased in 2008 ⁽⁵⁾	2020		0.0		0.0
	5.15% Refunding bonds repurchased in 2013 ⁽⁶⁾	2025		0.0		0.0
	1.5% Term rate bonds repurchased in 2011⁽⁷⁾	2030		0.0		0.0
	5.0% Refunding bonds repurchased in 2012⁽⁸⁾	2034		0.0		0.0
	Notes ⁽¹⁾⁽²⁾ : 6.25%	2015-2016		83.3		166.7
	6.10%	2018		200.0		200.0
	5.40%	2021		231.7		231.7
	2.60%	2022		225.0		225.0
	6.55%	2036		250.0		250.0
	6.15%	2037		190.0		190.0
	4.10%	2042		250.0		250.0
	4.35%	2044		290.0		290.0
	4.20%	2045		230.0		0.0
	Total long-term debt of Tampa Electric			2,004.2		1,857.6
PGS	Notes ⁽²⁾⁽³⁾ : 6.10%	2018		50.0		50.0
	5.40%	2021		46.7		46.7
	2.60%	2022		25.0		25.0
	6.15%	2037		60.0		60.0
	4.10%	2042		50.0		50.0
	4.35%	2044		10.0		10.0
	4.20%	2045		20.0		0.0
	Total long-term debt of PGS			261.7		241.7
NMGI	Notes ⁽²⁾⁽³⁾ : 2.71%	2019		50.0		50.0
	3.64%	2024		150.0		150.0
	Total long-term debt of NMGI			200.0		200.0
NMGC	Notes⁽²⁾⁽³⁾ : 4.87%	2021		200.0		200.0
	3.54%	2026		70.0		70.0
	Total long-term debt of NMGC			270.0		270.0
	Total long-term debt of TECO Energy			3,835.9		3,610.5
Unamortized debt discount, net				14.3		18.0
Total carrying amount of long-term debt				3,850.2		3,628.5
Less amount due within one year				333.3		274.5
Total long-term debt			$	3,516.9	$	3,354.0

(1)	Guaranteed by TECO Energy.

(2)	These long-term debt agreements contain various restrictive financial covenants.

(3)	These securities are subject to redemption in whole or in part, at any time, at the option of the issuer.

(4)	Tax-exempt securities.

(5)	In March 2008 these bonds, which were in auction rate mode, were purchased in lieu of redemption by TEC. These held variable rate bonds have a par amount of $20.0 million due in 2020.

(6)	In September 2013 these bonds, which were in term rate mode, were purchased in lieu of redemption by TEC. These held term rate bonds have a par amount of $51.6 million due in 2025.

(7)	In March 2011 these bonds, which were in term rate mode, were purchased in lieu of redemption by TEC. These held term rate bonds have a par amount of $75.0 million due in 2030.

(8)	In March 2012 these bonds, which were in term rate mode, were purchased in lieu of redemption by TEC. These held term rate bonds have a par amount of $86.0 million due in 2034.