Quarterly report pursuant to Section 13 or 15(d)

DEBT

v3.23.3
DEBT
 9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
DEBT
NOTE 9. DEBT
Loans Payable and Commercial Paper
Loans payable, commercial paper and the related weighted-average interest rates were as follows:
In millions September 30,
2023		 December 31,
2022
Loans payable (1)
$ 231  $ 210 
Commercial paper (2)
1,710  2,574 
(1) Loans payable consist primarily of notes payable to various domestic and international financial institutions. It is not practicable to aggregate these notes and calculate a quarterly weighted-average interest rate.
(2) The weighted-average interest rate, inclusive of all brokerage fees, was 5.48 percent and 4.27 percent at September 30, 2023 and December 31, 2022, respectively.
We can issue up to $4.0 billion of unsecured, short-term promissory notes (commercial paper) pursuant to the Board of Directors (the Board) authorized commercial paper programs. These programs facilitate the private placement of unsecured short-term debt through third-party brokers. We intend to use the net proceeds from the commercial paper borrowings for acquisitions and general corporate purposes.
Revolving Credit Facilities
On June 5, 2023, we entered into an amended and restated 364-day credit agreement that allows us to borrow up to $2.0 billion of unsecured funds at any time prior to June 3, 2024. This credit agreement amended and restated the prior $1.5 billion 364-day credit facility that matured on August 16, 2023. In connection with the 364-day credit agreement, effective June 5, 2023, we terminated our $500 million incremental 364-day credit agreement dated August 17, 2022.
We have access to committed credit facilities totaling $4.0 billion, including our $2.0 billion 364-day facility that expires June 3, 2024, and our $2.0 billion five-year facility that expires on August 18, 2026. We intend to maintain credit facilities at the current or higher aggregate amounts by renewing or replacing these facilities at or before expiration. These revolving credit facilities are maintained primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes. There were no outstanding borrowings under these facilities at September 30, 2023 and December 31, 2022. At September 30, 2023, the $1.7 billion of outstanding commercial paper effectively reduced the $4.0 billion of revolving credit capacity to $2.3 billion.
At September 30, 2023, we also had an additional $356 million available for borrowings under our international and other domestic credit facilities.
At September 30, 2023, Atmus had no outstanding borrowings under its $400 million revolving credit facility. See "Atmus Credit Agreement" section below for additional details.
Long-term Debt
A summary of long-term debt was as follows:
In millions Interest Rate September 30,
2023		 December 31,
2022
Long-term debt    
Senior notes, due 2023 (1)
3.65% $ 500  $ 500 
Hydrogenics promissory notes, due 2024 and 2025 (2)
—% 160  — 
Term loan, due 2025 (3) (4)
Variable 1,350  1,550 
Senior notes, due 2025 (5)
0.75% 500  500 
Atmus term loan, due 2027 (6)
Variable 600  — 
Debentures, due 2027 6.75% 58  58 
Debentures, due 2028 7.125% 250  250 
Senior notes, due 2030 (5)
1.50% 850  850 
Senior notes, due 2043 4.875% 500  500 
Senior notes, due 2050 2.60% 650  650 
Debentures, due 2098 (7)
5.65% 165  165 
Other debt 56  121 
Unamortized discount and deferred issuance costs (75) (64)
Fair value adjustments due to hedge on indebtedness (141) (122)
Finance leases 100  113 
Total long-term debt 5,523  5,071 
Less: Current maturities of long-term debt 573  573 
Long-term debt $ 4,950  $ 4,498 
(1) Senior notes, due 2023, are classified as current maturities of long-term debt. On October 2, 2023, we repaid the $500 million senior notes. See NOTE 19, "SUBSEQUENT EVENTS," to our Condensed Consolidated Financial Statements for additional information.
(2) See NOTE 16, "ACQUISITIONS," to our Condensed Consolidated Financial Statements for additional information.
(3) During the first nine months of 2023, we paid down $200 million of the term loan, and on October 31, 2023, we repaid an additional $150 million of the term loan.
(4) In September 2023, we entered into a series of interest rate swaps in order to trade a portion of the floating rate debt into fixed rate. See "Interest Rate Risk" in NOTE 13, "DERIVATIVES," to our Condensed Consolidated Financial Statements for additional information.
(5) In 2021, we entered into a series of interest rate swaps to effectively convert debt from a fixed rate to floating rate. See "Interest Rate Risk" in NOTE 13, "DERIVATIVES," to our Condensed Consolidated Financial Statements for additional information.
(6) See "Atmus Credit Agreement" section below for additional information.
(7) The effective interest rate is 7.48 percent.
Principal payments required on long-term debt during the next five years are as follows:
In millions 2023 2024 2025 2026 2027
Principal payments $ 523 
(1)
 $ 106  $ 1,989  $ 50  $ 604 
(1) On October 2, 2023, we repaid our $500 million senior notes, due 2023. See NOTE 19, "SUBSEQUENT EVENTS," to our Condensed Consolidated Financial Statements for additional information.
Fair Value of Debt
Based on borrowing rates currently available to us for bank loans with similar terms and average maturities, considering our risk premium, the fair values and carrying values of total debt, including current maturities, were as follows:
 
In millions September 30,
2023		 December 31,
2022
Fair value of total debt (1)
$ 6,939  $ 7,400 
Carrying value of total debt 7,464  7,855 
(1) The fair value of debt is derived from Level 2 input measures.
Atmus Credit Agreement
On February 15, 2023, certain of our subsidiaries entered into an amendment to the $1.0 billion credit agreement (Credit Agreement), consisting of a $400 million revolving credit facility and a $600 million term loan facility, in anticipation of the separation of Atmus, which extended the date on which the Credit Agreement terminated from March 30, 2023, to June 30, 2023. On May 26, 2023, Atmus drew down the entire $600 million term loan facility and borrowed $50 million under the revolving credit facility. Borrowings under the Credit Agreement mature in September 2027 (with quarterly payments on the term loan beginning in September 2024) and bear interest at varying rates, depending on the type of loan and, in some cases, the rates of designated benchmarks and the applicable borrower’s election. Generally, U.S. dollar-denominated loans bear interest at adjusted term Secured Overnight Financing Rate (SOFR) (which includes a 0.10 percent credit spread adjustment to term SOFR) for the applicable interest period plus a rate ranging from 1.125 percent to 1.75 percent. The Credit Agreement contains customary events of default and financial and other covenants, including maintaining a net leverage ratio of 4.0 to 1.0 and a minimum interest coverage ratio of 3.0 to 1.0. At September 30, 2023, they had no outstanding borrowings under the revolving credit facility and $600 million outstanding under the term loan facility. See NOTE 15, "FORMATION OF ATMUS AND IPO," to our Condensed Consolidated Financial Statements for additional information.