LONG-TERM DEBT | 5. LONG-TERM DEBT Our senior notes are secured by a first priority lien on certain transmission and distribution assets equally and ratably with all of Oncor’s other secured indebtedness. See “Deed of Trust” below for additional information. At September 30, 2019 and December 31, 2018, our long-term debt consisted of the following: September 30, December 31, 2019 2018 Fixed Rate Secured: 2.15% Senior Notes due June 1, 2019 $ - $ 250 5.75% Senior Notes due September 30, 2020 126 126 8.50% Senior Notes, Series C, due December 30, 2020 14 - 4.10% Senior Notes, due June 1, 2022 400 400 7.00% Debentures due September 1, 2022 482 482 2.75% Senior Notes due June 1, 2024 500 - 2.95% Senior Notes due April 1, 2025 350 350 3.86% Senior Notes, Series A, due December 3, 2025 174 - 3.86% Senior Notes, Series B, due January 14, 2026 38 - 3.70% Senior Notes due November 15, 2028 650 350 5.75% Senior Notes due March 15, 2029 318 318 7.25% Senior Notes, Series B, due December 30, 2029 37 - 6.47% Senior Notes, Series A, due September 30, 2030 84 - 7.00% Senior Notes due May 1, 2032 500 500 7.25% Senior Notes due January 15, 2033 350 350 7.50% Senior Notes due September 1, 2038 300 300 5.25% Senior Notes due September 30, 2040 475 475 4.55% Senior Notes due December 1, 2041 400 400 5.30% Senior Notes due June 1, 2042 500 500 3.75% Senior Notes due April 1, 2045 550 550 3.80% Senior Notes due September 30, 2047 325 325 4.10% Senior Notes due November 15, 2048 450 450 3.80% Senior Notes, due June 1, 2049 500 - 3.10% Senior Notes, due September 15, 2049 700 - Secured long-term debt 8,223 6,126 Unsecured: Term loan credit agreement maturing December 9, 2019 350 350 Term loan credit agreement maturing October 6, 2020 460 - Total long-term debt 9,033 6,476 Unamortized discount and debt issuance costs (57) (41) Less amount due currently (485) (600) Long-term debt, less amounts due currently $ 8,491 $ 5,835 Long-Term Debt-Related Activity in 2019 Long-Term Debt Activity in Connection with InfraREIT Acquisition In connection with the closing of the InfraREIT Acquisition, on May 16, 2019, we extinguished all of the $839 million of outstanding long-term debt of InfraREIT and its subsidiaries through repayment of $288 million principal amount of outstanding InfraREIT subsidiary senior notes (plus $5 million in accrued interest and $19 million in make-whole fees relating to those notes ) , repayment of a n o utstanding $200 million principal amount InfraREIT subsidiary term loan and the exchange of $351 million principal amount of outstanding InfraREIT subsidiary senior notes for a like principal amount of new ly issued Oncor secured senior notes. We received no proceeds from the issuance of the new Oncor notes and the exchanges were accoun ted for as debt modifications. Following are details of the exchanges: (i) $87 million aggregate principal amount of newly issued Oncor 6.47% Senior Notes, Series A, due September 30, 2030 (2030 Notes), issued in exchange for a like principal amount of SDTS’s 6.47% Senior Notes due September 30, 2030, (ii) $38 million aggregate principal amount of newly issued Oncor 7.25% Senior Notes, Series B, due December 30, 2029 (2029 Notes), issued in exchange for a like principal amount of SDTS’s 7.25% Senior Notes due December 30, 2029, (iii) $14 million aggregate principal amount of newly issued Oncor 8.50% Senior Notes, Series C, due December 30, 2020 (2020 Notes), issued in exchange for a like principal amount of Transmission and Distributions Company, L.L.C.’s 8.5% Senior Notes due December 30, 2020, (iv) $174 million aggregate principal amount of newly issued Oncor 3.86% Senior Notes, Series A, due December 3, 2025 (2025 Notes), issued in exchange for a like principal amount of SDTS’s 3.86% Senior Notes due December 3, 2025, and (v) $38 million aggregate principal amount of newly issued Oncor 3.86% Senior Notes, Series B, due January 14, 2026 (2026 Notes), issued in exchange for a like principal amount of SDTS’s 3.86% Senior Notes due January 14, 2026. The 2030 Notes, 2029 Notes and 2020 Notes were issued pursuant to a note purchase agreement (ABC Note Purchase Agreement) that we entered into on May 3, 2019. The 2025 Notes and 2026 Notes were issued pursuant to a note purchase agreement (AB Note Purchase Agreement, and together with the ABC Note Purchase Agreement, Note Purchase Agreements) that we entered into on May 6, 2019. Closing of the Note Purchase Agreements and issuance of the 2030 Notes, 2029 Notes, 2020 Notes, 2025 Notes and 2026 Notes (collectively, NPA Notes) occurred on May 16, 2019, immediately following consummation of the InfraREIT Acquisition. At closing of the Note Purchase Agreements, we paid accrued and unpaid interest and certain fees with respect to the exchanged notes totaling an aggregate of $6 million. The Note Purchase Agreements contain customary covenant restrictions and events of default. The NPA Notes are secured equally and ratably with our other secured indebtedness pursuant to the Deed of Trust. For more information on the Deed of Trust, see “Deed of Trust” below. We received no proceeds from the issuance of the NPA Notes. Additional Debt Repayments Repayments of long-term debt in the nine months ended September 30, 2019 included $250 million aggregate principal amount of our 2.15% senior secured notes due June 1, 2019 , $488 million aggregate principal amount of long-term debt of InfraREIT’s subsidiaries that we paid on May 16, 2019 in connection with and immediately following the InfraREIT Acquisition and $4 million principal amount of the quarterly amortizing debt for our 2020 Notes, 2029 Notes and 2030 Notes. Additional Long-Term Debt Issuances On September 12, 2019, we completed a sale of $700 million aggregate principal amount of 3.10% Senior Secured Notes due September 15, 2049 (3.10% 2049 Notes). We used the proceeds (net of the initial purchasers’ discount, fees and expenses) of $689 million from the sale of the 3.10% 2049 Notes for general corporate purposes, including to repay CP Notes, when due, under our CP Program. I nterest and the applicable principal repayment for the 3.10% 2049 Notes are payable on the 15th day of March and September of each year, beginning March 15, 2020. On May 23, 2019, we completed a sale of $500 million aggregate principal amount of 2.75% Senior Secured Notes due 2024 (2024 Notes), $300 million aggregate principal amount of 3.70% Senior Secured Notes due 2028 (2028 Notes) and $500 million aggregate principal amount of 3.80% Senior Secured Notes due 2049 ( 3.80% 2049 Notes and, together with the 2024 Notes and the 2028 Notes, the New Indenture Notes). The 2028 Notes constitute an additional issuance of our 3.70% Senior Secured Notes due 2028, $350 million of which we previously issued on August 10, 2018 and are currently outstanding (Outstanding Notes). The 2028 Notes were issued as part of the same series as the Outstanding Notes. Additionally, the 2028 Notes exchanged or sold in connection with the transactions contemplated by a registration rights agreement are expected to become fungible with the Outstanding Notes. We used the proceeds (net of the initial purchasers’ discount, fees, expenses and accrued interest) of $1,297 million from the sale of the New Indenture Notes for general corporate purposes, including to repay all amounts outstanding under the Bridge Loan, to repay our $250 million aggregate principal amount of 2.15% Senior Secured Notes due June 1, 2019 and to repay CP Notes, when due, under our CP Program. For more information on the Bridge Loan, see Note 4. The New Indenture Notes and 3.10% 2049 Notes were issued in separate private placements and were not registered under the Securities Act. We have agreed, subject to certain exceptions, to register with the SEC notes having substantially identical terms as the New Indenture Notes and 3.10% 2049 Notes (except for provisions relating to the transfer restriction and payment of additional interest) as part of our offers to exchange freely tradable exchange notes for the New Indenture Notes and 3.10% 2049 Notes. We have agreed to use commercially reasonable efforts to cause the exchange offers to be completed within 315 days after the applicable issue date of the New Indenture Notes and 3.10% 2049 Notes. If a registration statement for the exchange offers is not declared effective by the SEC within 270 days after the applicable issue date of the New Indenture Notes and 3.10% 2049 Notes or the exchange offers are not completed within 315 days after the applicable issue date of the New Indenture Notes and 3.10% 2049 Notes (an exchange default), then the annual interest rate on the New Indenture Notes and 3.10% 2049 Notes, as applicable, will increase 50 basis points per annum until the earlier of the expiration of the exchange default or the second anniversary of the applicable issue dates of the New Indenture Notes and 3.10% 2049 Notes. The registration statement for the exchange offers was declared effective by the SEC on October 17, 2019, which was within 270 days of the applicable issue date of the New Indenture Notes and the 3.10% 2049 Notes. September 2019 Term Loan Credit Agreement On September 6, 2019, we entered into an unsecured term loan credit agreement (2019 Term Loan Agreement) in an aggregate principal amount of up to $460 million. The agreement has a 13-month term, maturing on October 6, 2020. We borrowed the full aggregate principal amount available under the 2019 Term Loan Agreement of $460 million on September 25, 2019. The term loan bears interest at per annum rates equal to, at Oncor’s option, (i) LIBOR plus 0.50% , or (ii) an alternate base rate (the highest of (1) the prime rate of Wells Fargo, (2) the federal funds effective rate plus 0.50% , and (3) daily one-month LIBOR plus 1% ). We used the proceeds (net of fees and expenses) for general corporate purposes, including to repay CP Notes, when due, under our CP program. Deed of Trust Our secured indebtedness is secured equally and ratably by a first priority lien on property we acquired or constructed for the transmission and distribution of electricity. The property is mortgaged under the Deed of Trust. The Deed of Trust permits us to secure indebtedness with the lien of the Deed of Trust up to the aggregate of (i) the amount of available bond credits, and (ii) 85% of the lower of the fair value or cost of certain property additions that could be certified to the Deed of Trust collateral agent. At September 30, 2019, the amount of available bond credits was $2,784 million and the amount of future debt we could secure with property additions, subject to those property additions being certified to the Deed of Trust collateral agent, was $1,942 million. Borrowings under the CP Program, the Credit Facility, and our term loan credit agreements are not secured. Maturities Long-term maturities (including current maturities) at September 30, 2019, are as follows: Year Amount 2019 $ 485 2020 481 2021 9 2022 891 2023 10 Thereafter 7,157 Unamortized discount and debt issuance costs (57) Total $ 8,976 Fair Value of Long-Term Debt At September 30, 2019 and December 31, 2018, the estimated fair value of our long-term debt (including current maturities) totaled $10,477 million and $7,086 million, respectively, and the carrying amount totaled $8,976 million and $6,435 million, respectively. The fair value is estimated using observable market data, representing Level 2 valuations under accounting standards related to the determination of fair value. |