Annual report pursuant to Section 13 and 15(d)

Debt

v3.24.0.1
Debt
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
Debt DEBT
Debt consisted of the following (in millions):
December 31,
2023 2022
SPL:
Senior Secured Notes:
5.750% due 2024 (the “2024 SPL Senior Notes”)
$ 300  $ 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  1,782 
Total SPL Senior Secured Notes
 10,432  12,132 
Working capital revolving credit and letter of credit reimbursement agreement (the “SPL Working Capital Facility”)
—  — 
Revolving credit and guaranty agreement (the “SPL Revolving Credit Facility”)
—  — 
Total debt - SPL
 10,432  12,132 
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 
5.950% due 2033 (the “2033 CQP Senior Notes”)
1,400  — 
Total CQP Senior Notes
 5,600  4,200 
Credit facilities (the “CQP Credit Facilities”)
—  — 
Revolving credit and guaranty agreement (the “CQP Revolving Credit Facility”)
—  — 
Total debt - CQP
 5,600  4,200 
Total debt 16,032  16,332 
Current debt, net of discount and debt issuance costs (300) — 
Long-term portion of unamortized discount and debt issuance costs, net (126) (134)
Total long-term debt, net of discount and debt issuance costs $ 15,606  $ 16,198 
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 that is 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, except the 2033 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 and the 2033 CQP Senior Notes are jointly and severally guaranteed by each of our current and future subsidiaries who guarantee the CQP Revolving Credit Facility from time to time (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 (or 15% in the case of 2033 CQP Senior Notes), 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, 2023 (in millions):
Years Ending December 31, Principal Payments
2024 $ 300 
2025 2,052
2026 1,607
2027 1,612
2028 1,468
Thereafter 8,993
Total $ 16,032 
Credit Facilities

Below is a summary of our credit facilities outstanding as of December 31, 2023 (in millions):
SPL Revolving Credit Facility (1) (2)
CQP Revolving Credit Facility (1)(3)
Total facility size $ 1,000  $ 1,000 
Less:
Outstanding balance —  — 
Letters of credit issued 280  — 
Available commitment $ 720  $ 1,000 
Priority ranking Senior secured Senior unsecured
Interest rate on available balance (4)
SOFR plus credit spread adjustment of 0.1%, plus margin of 1.0% - 1.75% or base rate plus 0.0% - 0.75%
SOFR plus credit spread adjustment of 0.1%, plus margin of 1.125% - 2.0% or base rate plus 0.125% - 1.0%
Commitment fees on undrawn balance (4)
0.075% - 0.30%
0.10% - 0.30%
Maturity date June 23, 2028 June 23, 2028
(1)In June 2023, we and SPL refinanced and replaced the CQP Credit Facilities and the SPL Working Capital Facility with the CQP Revolving Credit Facility and the SPL Revolving Credit Facility, respectively, resulting in extended maturity dates, revised borrowing capacities, reduced rate of interest and commitment fees applicable thereunder and certain other changes to terms and conditions.
(2)The obligations of SPL under the SPL Revolving Credit 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 Revolving Credit Facility contains customary contractual conditions for extensions of credit.

(3)The obligations under the CQP Revolving Credit Facility are jointly, severally and unconditionally guaranteed by Cheniere Investments, SPLNG, CTPL, Sabine Pass LNG-GP, LLC, Sabine Pass Tug Services, LLC and Cheniere Pipeline GP Interests, LLC.

(4)The margin on the interest rate and the commitment fees is subject to change based on the applicable entity’s credit rating.

Loss on Extinguishment of Debt Related to Termination 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—Revenues 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. SPL is restricted from making distributions under agreements governing its 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, 2023, our restricted net assets of consolidated subsidiaries were approximately $56 million.

As of December 31, 2023, 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,
2023 2022 2021
Total interest cost $ 831  $ 910  $ 963 
Capitalized interest (8) (40) (132)
Total interest expense, net of capitalized interest $ 823  $ 870  $ 831 

Fair Value Disclosures

The following table shows the carrying amount and estimated fair value of our senior notes (in millions):
December 31, 2023 December 31, 2022
  Carrying
Amount		 Estimated
Fair Value (1)		 Carrying
Amount		 Estimated
Fair Value (1)
Senior notes $ 16,032  $ 15,636  $ 16,332  $ 15,386 
(1)As of both December 31, 2023 and 2022, $1.3 billion of the fair value of our senior notes were classified as Level 3 since these senior notes were valued by applying an unobservable illiquidity adjustment to the price derived from trades or indicative bids of instruments with similar terms, maturities and credit standing. The remainder of our senior notes are classified as Level 2, based on prices derived from trades or indicative bids of the instruments.

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.