Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.19.2
Debt
 6 Months Ended
Jun. 30, 2019
Debt Disclosure [Abstract]  
Debt DEBT
 
As of June 30, 2019 and December 31, 2018, our debt consisted of the following (in millions):
 
 
June 30,
 
December 31,
 
 
2019
 
2018
Long-term debt:
 
 
 
 
SPL
 
 
 
 
5.625% Senior Secured Notes due 2021 (“2021 SPL Senior Notes”)
 
$
2,000

 
$
2,000

6.25% Senior Secured Notes due 2022 (“2022 SPL Senior Notes”)
 
1,000

 
1,000

5.625% Senior Secured Notes due 2023 (“2023 SPL Senior Notes”)
 
1,500

 
1,500

5.75% Senior Secured Notes due 2024 (“2024 SPL Senior Notes”)
 
2,000

 
2,000

5.625% Senior Secured Notes due 2025 (“2025 SPL Senior Notes”)
 
2,000

 
2,000

5.875% Senior Secured Notes due 2026 (“2026 SPL Senior Notes”)
 
1,500

 
1,500

5.00% Senior Secured Notes due 2027 (“2027 SPL Senior Notes”)
 
1,500

 
1,500

4.200% Senior Secured Notes due 2028 (“2028 SPL Senior Notes”)
 
1,350

 
1,350

5.00% Senior Secured Notes due 2037 (“2037 SPL Senior Notes”)
 
800

 
800

Cheniere Partners
 
 
 
 
5.250% Senior Notes due 2025 (“2025 CQP Senior Notes”)
 
1,500

 
1,500

5.625% Senior Notes due 2026 (“2026 CQP Senior Notes”)
 
1,100

 
1,100

2016 CQP Credit Facilities
 
—

 
—

2019 CQP Credit Facilities
 
649

 
—

Unamortized premium, discount and debt issuance costs, net
 
(179
)
 
(184
)
Total long-term debt, net
 
16,720

 
16,066

 
 
 
 
 
Current debt:
 
 
 
 
$1.2 billion SPL Working Capital Facility (“SPL Working Capital Facility”)
 
—

 
—

 
 
 
 
 
Total debt, net
 
$
16,720

 
$
16,066



2019 Debt Issuances and Terminations

2016 CQP Credit Facilities

In May 2019, the remaining commitments under the 2016 CQP Credit Facilities were terminated. There were no write-offs of debt issuance costs associated with the termination of the 2016 CQP Credit Facilities.

2019 CQP Credit Facilities

In May 2019, we entered into the $1.5 billion 2019 CQP Credit Facilities, which consist of a $750 million term loan (“CQP Term Facility”) and a $750 million revolving credit facility (“CQP Revolving Facility”). Borrowings under the 2019 CQP Credit Facilities will be used to fund the development and construction of Train 6 of the Liquefaction Project and subject to a sublimit, for general corporate purposes. The CQP Revolving Facility is also available for the issuance of letters of credit.

Loans under the 2019 CQP Credit Facilities will accrue interest at a variable rate per annum equal to LIBOR or the base rate (equal to the highest of the prime rate, the federal funds effective rate, as published by the Federal Reserve Bank of New York, plus 0.50%, and the adjusted one-month LIBOR plus 1.0%), plus the applicable margin. Under the CQP Term Facility, the applicable margin for LIBOR loans is 1.50% per annum, and the applicable margin for base rate loans is 0.50% per annum, in each case with a 0.25% step-up beginning on May 29, 2022. Under the CQP Revolving Facility, the applicable margin for LIBOR loans is 1.25% to 2.125% per annum, and the applicable margin for base rate loans is 0.25% to 1.125% per annum, in each case depending on our then-current rating. Interest on LIBOR loans is due and payable at the end of each applicable LIBOR period (and at the end of every three-month period within the LIBOR period, if any), and interest on base rate loans is due and payable at the end of each calendar quarter.

We incurred $20 million of discounts and debt issuance costs in conjunction with the entry into the 2019 CQP Credit Facilities. We pay a commitment fee equal to an annual rate of 30% of the margin for LIBOR loans multiplied by the average daily amount of the undrawn commitment, payable quarterly in arrears.

The 2019 CQP Credit Facilities mature on May 29, 2024. The principal of any loans under the 2019 CQP Credit Facilities must be repaid in quarterly installments commencing on May 29, 2023 based on an amortization schedule. Any outstanding balance may be repaid, in whole or in part, at any time without premium or penalty, except for interest hedging and interest rate breakage costs. The 2019 CQP Credit Facilities contain conditions precedent for extensions of credit, as well as customary affirmative and negative covenants, and limit our ability to make restricted payments, including distributions, to once per fiscal quarter and one true-up per fiscal quarter as long as certain conditions are satisfied.

The 2019 CQP Credit Facilities are unconditionally guaranteed by each of our subsidiaries other than SPL, Sabine Pass LNG-LP, LLC and certain of our subsidiaries owning other development projects, as well as certain other specified subsidiaries and members of the foregoing entities.

Credit Facilities

Below is a summary of our credit facilities outstanding as of June 30, 2019 (in millions):
 
 
SPL Working Capital Facility (1)
 
2019 CQP Credit Facilities
Original facility size
 
$
1,200

 
$
1,500

Less:
 
 
 
 
Outstanding balance
 
—

 
649

Commitments prepaid or terminated
 
—

 
—

Letters of credit issued
 
415

 
—

Available commitment
 
$
785


$
851

 
 
 
 
 
Interest rate on outstanding balance
 
LIBOR plus 1.75% or base rate plus 0.75%
 
(2)
Weighted average interest rate of outstanding balance
 
n/a
 
3.92%
Maturity date
 
December 31, 2020
 
May 29, 2024

 
(1)
The SPL Working Capital Facility was amended in May 2019 in connection with commercialization and financing of Train 6 of the Liquefaction Project. All terms of the SPL Working Capital Facility substantially remained unchanged.
(2)
LIBOR plus 1.50% or base rate plus 0.50%, with a 0.25% step-up beginning on May 29, 2022 for the CQP Term Facility. LIBOR plus 1.25% to 2.125% or base rate plus 0.25% to 1.125%, depending on our then-current rating for the CQP Revolving Facility.

Restrictive Debt Covenants

As of June 30, 2019, we and SPL were in compliance with all covenants related to our respective debt agreements.

Interest Expense

Total interest expense consisted of the following (in millions):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2019
 
2018
 
2019
 
2018
Total interest cost
 
$
237

 
$
234

 
$
472

 
$
466

Capitalized interest
 
(7
)
 
(50
)
 
(55
)
 
(97
)
Total interest expense, net
 
$
230

 
$
184

 
$
417

 
$
369



Fair Value Disclosures

The following table shows the carrying amount, which is net of unamortized premium, discount and debt issuance costs, and estimated fair value of our debt (in millions):
 
 
June 30, 2019
 
December 31, 2018
 
 
Carrying
Amount
 
Estimated
Fair Value
 
Carrying
Amount
 
Estimated
Fair Value
Senior notes (1)
 
$
15,288

 
$
16,755

 
$
15,275

 
$
15,672

2037 SPL Senior Notes (2)
 
791

 
912

 
791

 
817

Credit facilities (3)
 
641

 
641

 
—

 
—

 
(1)
Includes 2021 SPL Senior Notes, 2022 SPL Senior Notes, 2023 SPL Senior Notes, 2024 SPL Senior Notes, 2025 SPL Senior Notes, 2026 SPL Senior Notes, 2027 SPL Senior Notes, 2028 SPL Senior Notes, 2025 CQP Senior Notes and 2026 CQP Senior Notes. 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 our stock price and interest rates based on debt issued by parties with comparable credit ratings to us and inputs that are not observable in the market.
(3)
Includes the SPL Working Capital Facility, 2016 CQP Credit Facilities and 2019 CQP Credit Facilities. Level 3 estimated fair value approximates the principal amount 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.