Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.20.1
Debt
 3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Debt DEBT
 
As of March 31, 2020 and December 31, 2019, our debt consisted of the following (in millions):
 
 
March 31,
 
December 31,
 
 
2020
 
2019
Long-term debt:
 
 
 
 
SPL
 
 
 
 
5.625% Senior Secured Notes due 2021 (“2021 SPL Senior Notes”)
 
$
—

 
$
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

$1.2 billion SPL Working Capital Facility executed in 2020 (“2020 SPL Working Capital Facility”)
 
—

 
—

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

4.500% Senior Notes due 2029 (“2029 CQP Senior Notes”)
 
1,500

 
1,500

CQP Credit Facilities executed in 2019 (“2019 CQP Credit Facilities”)
 
—

 
—

Unamortized premium, discount and debt issuance costs, net
 
(159
)
 
(171
)
Total long-term debt, net
 
15,591


17,579

 
 
 
 
 
Current debt:
 
 
 
 
2021 SPL Senior Notes
 
2,000

 
—

$1.2 billion SPL Working Capital Facility executed in 2015 (“2015 SPL Working Capital Facility”)
 
—

 
—

Unamortized premium, discount and debt issuance costs, net
 
(4
)
 
—

Total current debt
 
1,996

 
—

 
 
 
 
 
Total debt, net
 
$
17,587

 
$
17,579



2020 Material Debt Activities

2020 SPL Working Capital Facility

In March 2020, SPL entered into the 2020 SPL Working Capital Facility with aggregate commitments of $1.2 billion, which replaced the 2015 SPL Working Capital Facility. The 2020 SPL Working Capital Facility is intended to be used for loans to SPL (“SPL Revolving Loans”), swing line loans to SPL (“SPL Swing Line Loans”) and the issuance of letters of credit on behalf of SPL, primarily for (1) the refinancing of the 2015 SPL Working Capital Facility, (2) fees and expenses related to the 2020 SPL Working Capital Facility, (3) SPL’s gas purchase obligations and (4) SPL and certain of its future subsidiaries’ general corporate purposes. SPL may, from time to time, request increases in the commitments under the 2020 SPL Working Capital Facility of up to $800 million.
Loans under the 2020 SPL Working Capital Facility accrue interest at a variable rate per annum equal to LIBOR or the base rate (equal to the highest of the senior facility agent’s published prime rate, the federal funds rate, as published by the Federal Reserve Bank of New York, plus 0.50% and one month LIBOR plus 0.50%), plus the applicable margin. The applicable margin for LIBOR loans under the 2020 SPL Working Capital Facility is 1.125% to 1.750% per annum (depending on the then-current rating of SPL), and the applicable margin for base rate loans under the 2020 SPL Working Capital Facility is 0.125% to 0.750% per annum (depending on the then-current rating of SPL). Interest on LIBOR loans is due and payable at the end of each applicable LIBOR period, and interest on base rate loans is due and payable at the end of each fiscal quarter.

SPL pays a commitment fee equal to an annual rate of 0.1% to 0.3% (depending on the then-current rating of SPL), which accrues on the daily amount of the total commitment less the sum of (1) the outstanding principal amount of SPL Revolving Loans, (2) letters of credit issued and (3) the outstanding principal amount of SPL Swing Line Loans. If draws are made upon a letter of credit issued under the 2020 SPL Working Capital Facility and SPL does not elect for such draw to be deemed an SPL LC Loan (an “SPL LC Draw”), SPL is required to pay the full amount of the SPL LC Draw on or prior to noon eastern time on the business day of the SPL LC Draw. An SPL LC Draw accrues interest at the base rate plus the applicable margin. As of March 31, 2020, no SPL LC Draws had been made upon any letters of credit issued under the 2020 SPL Working Capital Facility.

The 2020 SPL Working Capital Facility matures on March 19, 2025, but may be extended with consent of the lenders. The 2020 SPL Working Capital Facility provides for mandatory prepayments under customary circumstances.

The 2020 SPL Working Capital Facility contains customary conditions precedent for extensions of credit, as well as customary affirmative and negative covenants. SPL is restricted from making certain distributions under agreements governing its indebtedness generally until, among other requirements, satisfaction of a 12-month forward-looking and backward-looking 1.25:1.00 debt service reserve ratio test. The obligations of SPL under the 2020 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 Notes.

Credit Facilities

Below is a summary of our credit facilities outstanding as of March 31, 2020 (in millions):
 
 
2020 SPL Working Capital Facility
 
2019 CQP Credit Facilities
Original facility size
 
$
1,200

 
$
1,500

Less:
 
 
 
 
Outstanding balance
 
—

 
—

Commitments prepaid or terminated
 
—

 
750

Letters of credit issued
 
414

 
—

Available commitment
 
$
786

 
$
750

 
 
 
 
 
Interest rate on available balance
 
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%
Weighted average interest rate of outstanding balance
 
n/a
 
n/a
Maturity date
 
March 19, 2025
 
May 29, 2024


Restrictive Debt Covenants

As of March 31, 2020, 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 March 31,
 
 
2020
 
2019
Total interest cost
 
$
254

 
$
235

Capitalized interest
 
(20
)
 
(48
)
Total interest expense, net
 
$
234


$
187


Fair Value Disclosures

The following table shows the carrying amount and estimated fair value of our debt (in millions):
 
 
March 31, 2020
 
December 31, 2019
 
 
Carrying
Amount
 
Estimated
Fair Value
 
Carrying
Amount
 
Estimated
Fair Value
Senior notes (1)
 
$
16,950

 
$
15,762

 
$
16,950

 
$
18,320

2037 SPL Senior Notes (2)
 
800

 
709

 
800

 
934

Credit facilities (3)
 
—

 
—

 
—

 
—

 
(1)
Includes the SPL Senior Notes except the 2037 SPL Senior Notes and the 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 2015 SPL Working Capital Facility, 2020 SPL Working Capital Facility and 2019 CQP Credit Facilities. The 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.