Annual report pursuant to Section 13 and 15(d)

Debt

v3.22.4
Debt
 12 Months Ended
Dec. 31, 2022
Debt Disclosure [Abstract]  
Debt DEBT
 
Debt consisted of the following (in millions):
December 31,
2022 2021
SPL:
Senior Secured Notes:
5.625% due 2023
 $ —  $ 1,500 
5.75% due 2024
 2,000  2,000 
5.625% due 2025
 2,000  2,000 
5.875% due 2026
 1,500  1,500 
5.00% due 2027
 1,500  1,500 
4.200% due 2028
 1,350  1,350 
4.500% due 2030
 2,000  2,000 
4.746% weighted average rate due 2037
 1,782  1,282 
Total SPL Senior Secured Notes 12,132  13,132 
Working capital revolving credit and letter of credit reimbursement agreement (the “SPL Working Capital Facility”)
 —  — 
Total debt - SPL 12,132  13,132 
CQP:
Senior Notes:
4.500% due 2029
 1,500  1,500 
4.000% due 2031
 1,500  1,500 
3.25% due 2032
 1,200  1,200 
Total CQP Senior Notes 4,200  4,200 
Credit facilities (the “CQP Credit Facilities”)
 —  — 
Total debt - CQP 4,200  4,200 
Total debt 16,332  17,332 
Unamortized premium, discount and debt issuance costs, net (134) (155)
Total long-term debt, net of premium, discount and debt issuance costs $ 16,198  $ 17,177 
Senior Notes

SPL Senior Secured Notes

The SPL Senior Secured Notes are senior secured obligations of SPL, ranking equally in right of payment with SPL’s other existing and future senior debt and secured by the same collateral and senior in right of payment to any of its future subordinated debt. Subject to permitted liens, the SPL Senior Secured Notes are secured on a pari passu first-priority basis by a security interest in all of the membership interests in SPL and substantially all of SPL’s assets. SPL may, at any time, redeem all or part of the SPL Senior Secured Notes at specified prices set forth in the respective indentures governing the SPL Senior Secured Notes, plus accrued and unpaid interest, if any, to the date of redemption. The series of SPL Senior Secured Notes due in 2037 are fully amortizing according to a fixed sculpted amortization schedule, as set forth in the respective indentures.

CQP Senior Notes

The CQP Senior Notes are jointly and severally guaranteed by each of our subsidiaries other than SPL and, subject to certain conditions governing its guarantee, Sabine Pass LP (each a “Guarantor” and collectively, the “CQP Guarantors”). The CQP Senior Notes are our senior obligations, ranking equally in right of payment with our other existing and future unsubordinated debt and senior to any of its future subordinated debt. In the event that the aggregate amount of our secured indebtedness and the secured indebtedness of the CQP Guarantors (other than the CQP Senior Notes or any other series of notes issued under the CQP Base Indenture) outstanding at any one time exceeds the greater of (1) $1.5 billion and (2) 10% of net tangible assets, the CQP Senior Notes will be secured by a first-priority lien (subject to permitted encumbrances) on substantially all of our existing and future tangible and intangible assets and rights and the CQP Guarantors and equity interests in the CQP Guarantors. The liens securing the CQP Senior Notes, if applicable, will be shared equally and ratably (subject to permitted liens) with the holders of any other senior secured obligations. We may, at any time, redeem all or part of the CQP Senior Notes at specified prices set forth in the respective indentures governing the CQP Senior Notes, plus accrued and unpaid interest, if any, to the date of redemption.

Below is a schedule of future principal payments that we are obligated to make on our outstanding debt at December 31, 2022 (in millions):
Years Ending December 31, Principal Payments
2023 $ — 
2024 2,000
2025 2,051
2026 1,608
2027 1,612
Thereafter 9,061
Total $ 16,332 
Credit Facilities

Below is a summary of our credit facilities outstanding as of December 31, 2022 (in millions):
SPL Working Capital Facility (1)
CQP Credit Facilities (2)
Total facility size $ 1,200  $ 750 
Less:
Outstanding balance —  — 
Letters of credit issued 328  — 
Available commitment $ 872  $ 750 
Priority ranking Senior secured Unsecured
Interest rate on available balance (3)
LIBOR plus 1.125% - 1.750% or base rate plus 0.125% - 0.750%
LIBOR plus 1.25% - 2.125% or base rate plus 0.25% - 1.125%
Commitment fees on undrawn balance (3)
0.10% - 0.30%
0.375% - 0.638%
Maturity date March 19, 2025 May 29, 2024
(1)The obligations of SPL under the SPL Working Capital Facility are secured by substantially all of the assets of SPL as well as a pledge of all of the membership interests in SPL and certain future subsidiaries of SPL on a pari passu basis by a first priority lien with the SPL Senior Secured Notes. The SPL Working Capital Facility contains customary conditions precedent for extensions.
(2)The obligations under the CQP Credit Facilities are unconditionally guaranteed by the CQP Guarantors.
(3)The margin on the interest rate and the commitment fees are subject to change based on the applicable entity’s credit rating.

Losses on Extinguishment of Debt Related to Termination of Agreement with Chevron

Our loss on modification or extinguishment of debt for the year ended December 31, 2022 includes a loss on extinguishment of prospective payment obligations of $31 million associated with a premium paid to Chevron U.S.A. Inc. (“Chevron”) to terminate a revenue sharing arrangement under the terminal marine services agreement with them. See Note 13—Revenue for further discussion of the termination of agreements with Chevron.
Restrictive Debt Covenants

The indentures governing our senior notes and other agreements underlying our debt contain customary terms and events of default and certain covenants that, among other things, may limit us and our restricted subsidiaries’ ability to make certain investments or pay dividends or distributions. We and SPL are restricted from making distributions under agreements governing our and SPL’s indebtedness generally until, among other requirements, appropriate reserves have been established for debt service using cash or letters of credit and a historical debt service coverage ratio and projected debt service coverage ratio of at least 1.25:1.00 is satisfied. At December 31, 2022, our restricted net liabilities of consolidated subsidiaries were approximately $1.8 billion.

As of December 31, 2022, we and SPL were in compliance with all covenants related to our respective debt agreements.
Interest Expense

Total interest expense, net of capitalized interest consisted of the following (in millions):
Year Ended December 31,
2022 2021 2020
Total interest cost $ 910  $ 963  $ 1,005 
Capitalized interest (40) (132) (96)
Total interest expense, net of capitalized interest $ 870  $ 831  $ 909 
Fair Value Disclosures

The following table shows the carrying amount and estimated fair value of our debt (in millions):
December 31, 2022 December 31, 2021
  Carrying
Amount		 Estimated
Fair Value		 Carrying
Amount		 Estimated
Fair Value
Senior notes — Level 2 (1) $ 14,980  $ 14,162  $ 16,050  $ 17,496 
Senior notes — Level 3 (2) 1,352  1,224  1,282  1,466 
(1)The Level 2 estimated fair value was based on quotes obtained from broker-dealers or market makers of these senior notes and other similar instruments.
(2)The Level 3 estimated fair value was calculated based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including interest rates based on debt issued by parties with comparable credit ratings to us and inputs that are not observable in the market.

The estimated fair value of our credit facilities approximates the principal amount outstanding because the interest rates are variable and reflective of market rates and the debt may be repaid, in full or in part, at any time without penalty.