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 June 30, 2020 and December 31, 2019, our long-term debt consisted of the following: June 30, December 31, 2020 2019 Fixed Rate Secured: 5.75% Senior Notes due September 30, 2020 $ 126 $ 126 8.50% Senior Notes, Series C, due December 30, 2020 13 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 500 500 2.95% Senior Notes due April 1, 2025 350 350 3.86% Senior Notes, Series A, due December 3, 2025 174 174 3.86% Senior Notes, Series B, due January 14, 2026 38 38 3.70% Senior Notes due November 15, 2028 650 650 5.75% Senior Notes due March 15, 2029 318 318 7.25% Senior Notes, Series B, due December 30, 2029 35 36 2.75% Senior Notes due May 15, 2030 400 - 6.47% Senior Notes, Series A, due September 30, 2030 80 83 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 500 500 3.10% Senior Notes, due September 15, 2049 700 700 3.70% Senior Notes due May 15, 2050 400 - Secured long-term debt 9,016 8,221 Unsecured: Term loan agreement maturing October 6, 2020 - 460 Term loan agreement maturing June 1, 2021 450 - Term loan agreement maturing June 30, 2021 15 - Total long-term debt 9,481 8,681 Unamortized discount and debt issuance costs (63) (56) Less amount due currently (613) (608) Long-term debt, less amounts due currently $ 8,805 $ 8,017 Long-Term Debt-Related Activity in 2020 Debt Issuances On March 20, 2020, we completed a sale of $400 million aggregate principal amount of 2.75% Senior Secured Notes due May 15, 2030 (2030 Notes) and $400 million aggregate principal amount of 3.70% Senior Secured Notes due May 15, 2050 (2050 Notes and, together with the 2030 Notes, the Notes). We used the proceeds (net of the initial purchasers’ discount, fees and expenses) of approximately $790 million from the sale of the Notes for general corporate purposes, including the repayment of short-term and long-term debt. The Notes were issued pursuant to the provisions of an Indenture, dated as of August 1, 2002, between Oncor and The Bank of New York Mellon Trust Company, N.A. (as successor to The Bank of New York Mellon, formerly The Bank of New York) (as amended and supplemented, the Indenture). The 2030 Notes and the 2050 Notes each constitute a separate series of notes under the Indenture, but will be treated together with Oncor’s other outstanding debt securities issued under the Indenture for amendments and waivers and for taking certain other actions. The 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 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 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 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 Notes or the exchange offers are not completed within 315 days after the applicable issue date of the Notes (an exchange default), then the annual interest rate on each series of the Notes will increase 50 basis points per annum until the earlier of the expiration of the exchange default or the second anniversary of the issue dates of the Notes. The registration statement for the exchange offers was declared effective on July 13, 2020, which was within the 270 days of the issue date of the Notes. Ma rch 2020 Term Loan Agreement On March 23, 2020, we entered into an unsecured term loan agreement (March 2020 Term Loan Agreement) with Wells Fargo Bank, National Association (Wells Fargo), the administrative agent and a lender under the agreement with a commitment equal to an aggregate principal amount of $350 million. We entered into an amendment to the agreement in June 2020. As amended, the March 2020 Term Loan Agreement has a maturity date of June 30, 2021. We may borrow up to $350 million in up to four borrowings which may be made, at our option, at any time in the period beginning on April 1, 2020 and ending on the earliest to occur of (i) the date on which the term loans are funded in full and no commitments remain unused, (ii) the fourth funding date and (iii) 5:00 p.m. Eastern time on August 7, 2020. As amended, the March 2020 Term Loan Agreement provides for loans to bear interest at per annum rates equal to, at our option, (x) LIBOR plus 0.950% , or (y) 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% ). On June 30, 2020, we made our first borrowing under the March 2020 Term Loan Agreement, in the amount of $15 million . The proceeds from the borrowing were used for ge neral corporate purposes. January 2020 Term Loan Agreement On January 28, 2020, we executed a $450 million term loan agreement that matures on June 1, 2021 (January 2020 Term Loan Agreement). The January 2020 Term Loan Agreement provides for borrowing the full amount in up to four borrowings by April 27, 2020. We borrowed $163 million on January 29, 2020, $55 million on February 28, 2020 and $232 million on March 17, 2020 under the January 2020 Term Loan Agreement. At June 30, 2020, borrowings under the January 2020 Term Loan Agreement totaled $450 million, the full amount available under the agreement. The proceeds from each borrowing were used for general corporate purposes, including the repayment of notes outstanding under our CP Program. Loans under the January 2020 Term Loan Agreement bear interest at per annum rates equal to, at our option, (i) LIBOR plus 0.50% until June 1, 2021, or (ii) an alternate base rate (the highest of (1) the prime rate of Sumitomo Mitsui Banking Corporation, the administrative agent and a lender under the agreement, (2) the federal funds effective rate plus 0.50% , and (3) daily one-month LIBOR plus 1% ). Interest Rate Hedge Transactions In February and March of 2020, we entered into interest rate hedge transactions hedging the variability of benchmark bond rates used to determine interest rates on anticipated issuances of ten -year and thirty -year senior secured notes. The hedges were terminated in March 2020 upon our issuance of the Notes discussed in “Debt Issuances” above. We recognized a $29 million ( $23 million after-tax) loss related to the fair value of the hedge transactions in accumulated other comprehensive loss. We expect approximately $4 million of the amount reported in accumulated other comprehensive loss at June 30, 2020 related to interest rate hedges to be reclassified into net income as an increase to interest expense within the next 12 months, including $2 million from the current period transactions. Debt Repayments Repayments of long-term debt during the six months ended June 30, 2020 included $460 million principal amount borrowed under a term loan agreement entered into in 2019 that was to mature in October 2020 (2019 Term Loan Agreement) and $5 million principal amount of the quarterly amortizing debt for senior secured notes issued under one of our Note Purchase Agreements . The $460 million repaid under the 2019 Term Loan Agreement constituted all amounts outstanding under that agreement, and as a result of that repayment, the 2019 Term Loan Agreement is no longer in effect. Deed of Trust Our secured indebtedness is secured equally and ratably by a first priority lien on property Oncor 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 June 30, 2020, the amount of available bond credits was $1.975 billion 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 $3.062 billion . Borrowings under the CP Program, the Credit Facility, and our term loan agreements are not secured. Maturities Long-term maturities (including current maturities) at June 30, 2020, are as follows: Year Amount 2020 (excluding first six months of 2020) $ 148 2021 474 2022 891 2023 10 2024 511 Thereafter 7,447 Unamortized discount and debt issuance costs (63) Total $ 9,418 Fair Value of Long-Term Debt At June 30, 2020 and December 31, 2019, the estimated fair value of our long-term debt (including current maturities) totaled $11.471 billion and $10.003 billion, respectively, and the carrying amount totaled $9.418 billion and $8.625 billion, respectively. The fair value is estimated using observable market data, representing Level 2 valuations under accounting standards related to the determination of fair value. |