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Financial Instruments

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Financial Instruments

Financial Instruments

a) Fair Value Measurements

For a description of how the Partnership estimates fair value and for a description of the fair value hierarchy levels, see Item 18 – Financial Statements: Note 3 to the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2020. The following table includes the estimated fair value and carrying value of those assets and liabilities that are measured at fair value on a recurring and non-recurring basis, as well as the estimated fair value of the Partnership’s financial instruments that are not accounted for at fair value on a recurring basis.

												June 30, 2021												December 31, 2020
						Fair Value Hierarchy Level						Carrying Amount Asset (Liability) $						Fair Value Asset (Liability) $						Carrying Amount Asset (Liability) $						Fair Value Asset (Liability) $
Recurring:
Cash and cash equivalents and restricted cash (note 15)						Level 1						190,200						190,200						257,943						257,943
Derivative instruments (note 11)
Interest rate swap agreements – assets						Level 2						1,363						1,363						—						—
Interest rate swap agreements – liabilities						Level 2						(40,048)						(40,048)						(75,468)						(75,468)
Cross currency swap agreements – assets						Level 2						5,820						5,820						4,505						4,505
Cross currency swap agreements – liabilities						Level 2						(18,524)						(18,524)						(20,022)						(20,022)
Non-recurring:
Vessels and equipment						Level 2						—						—						40,717						40,717
Other:
Loans to equity-accounted joint ventures (note 7)						(i)						106,301						(i)						116,632						(i)
Long-term debt – public (note 8)						Level 1						(351,786)						(360,319)						(352,260)						(359,581)
Long-term debt – non-public (note 8)						Level 2						(1,065,593)						(1,084,437)						(1,119,953)						(1,137,050)
Obligations related to finance leases (note 5a)						Level 2						(1,305,055)						(1,386,363)						(1,340,922)						(1,456,927)

(i)The advances to equity-accounted joint ventures together with the Partnership’s equity investments in the joint ventures form the net aggregate carrying value of the Partnership’s interests in the joint ventures in these unaudited consolidated financial statements. The fair values of the individual components of such aggregate interests are not determinable.

b) Credit Losses

For a description of the Partnership's exposure to potential credit losses under ASC 326, see Item 18 – Financial Statements: Note 3b to the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2020.

The following table includes the amortized cost basis of the Partnership’s direct interests in financing receivables and net investment in direct financing leases by class of financing receivables and by period of origination and their associated credit quality as at June 30, 2021 and December 31, 2020.

						Amortized Cost Basis by Origination Year
						Credit Quality Grade (1)						2020						2018						2016 and prior						Total
As at June 30, 2021												$						$						$						$
Direct financing leases
Tangguh Hiri and Tangguh Sago						Performing						—						—						326,166						326,166
Bahrain Spirit						Performing						—						210,795						—						210,795
												—						210,795						326,166						536,961
Loans to equity-accounted joint ventures
Exmar LPG Joint Venture						Performing						—						—						32,266						32,266
Bahrain LNG Joint Venture						Performing						—						—						73,375						73,375
Other						Performing						660						—						—						660
												660						—						105,641						106,301
												660						210,795						431,807						643,262
As at December 31, 2020
Direct financing leases
Tangguh Hiri and Tangguh Sago						Performing						—						—						332,308						332,308
Bahrain Spirit						Performing						—						211,939						—						211,939
												—						211,939						332,308						544,247
Loans to equity-accounted joint ventures
Exmar LPG Joint Venture						Performing						—						—						42,266						42,266
Bahrain LNG Joint Venture						Performing						—						—						73,375						73,375
Other						Performing						991						—						—						991
												991						—						115,641						116,632
												991						211,939						447,949						660,879

(1)For a description of how the Partnership's credit quality grades are determined see Item 18 – Financial Statements: Note 3b to the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2020. As at June 30, 2021 and December 31, 2020, all direct financing and sales-type leases held by the Partnership and the Partnership’s equity-accounted joint ventures had a credit quality grade of performing.

Changes in the Partnership's allowance for credit losses for the three and six months ended June 30, 2021 and 2020 are as follows:

			Direct Financing Leases (1) (2) $						Direct Financing and Sales-Type Leases and Other within Equity-Accounted Joint Ventures (1) (2) $						Loans to Equity-Accounted Joint Ventures (1) $						Guarantees of Debt (1) $						Total $
Three and Six Months Ended June 30, 2021
As at December 31, 2020			30,177						54,937						4,726						2,080						91,920
Provision for (reversal of) potential credit losses			4,436						6,677						(981)						218						10,350
As at March 31, 2021			34,613						61,614						3,745						2,298						102,270
Provision for (reversal of) potential credit losses			787						722						255						(298)						1,466
As at June 30, 2021			35,400						62,336						4,000						2,000						103,736
Three and Six Months Ended June 30, 2020
As at January 1, 2020			11,155						36,292						3,714						2,139						53,300
(Reversal of) provision for potential credit losses			(100)						8,980						—						—						8,880
As at March 31, 2020			11,055						45,272						3,714						2,139						62,180
Provision for (reversal of) potential credit losses			465						(423)						83						(288)						(163)
As at June 30, 2020			11,520						44,849						3,797						1,851						62,017

(1)For a description of how the credit loss provision for direct financing leases, direct financing and sales-type leases and other within equity-accounted joint ventures, loans to equity-accounted joint ventures and guarantees of debt was determined for the three and six months ended June 30, 2021 and 2020, see Item 18 – Financial Statements: Note 3b to the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2020.

(2)The change in credit loss provision of $0.8 million and $5.2 million for the Partnership's consolidated vessels for the three and six months ended June 30, 2021, respectively ($0.5 million and $0.4 million for the three and six months ended June 30, 2020, respectively), was included in other expense in the Partnership's consolidated statements of income. The change in the credit loss provision for the six months ended June 30, 2021 primarily reflects a decline in the estimated charter-free valuations for certain types of its liquefied natural gas (or LNG) carriers at the end of their time-charter contract which are accounted for as direct financing leases. These estimated future charter-free values are subject to change based on the underlying LNG shipping market fundamentals.

The change in credit loss provision of $0.7 million and $7.4 million for the three and six months ended June 30, 2021, respectively ($(0.4) million and $8.6 million for the three and six months ended June 30, 2020, respectively), relating to the direct financing and sales-type leases and other within the Partnership's equity-accounted joint ventures was included in equity income in the Partnership's consolidated statements of income. The change in credit loss provision for the six months ended June 30, 2021 primarily reflects a decline in the estimated charter-free valuations for certain types of LNG carriers at the end of their time-charter contract, which are accounted for as direct financing and sales-type leases.

The changes in the credit loss provision for the Partnership's consolidated vessels and the vessels within the Partnership's equity-accounted joint ventures for the six months ended June 30, 2021 do not reflect any material change in expectations of the charterers' ability to make their time-charter hire payments as they come due compared to the beginning of the year.

Fair Value Measurement and Measurement Inputs, Recurring and Nonrecurring

a) Fair Value Measurements

For a description of how the Partnership estimates fair value and for a description of the fair value hierarchy levels, see Item 18 – Financial Statements: Note 3 to the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2020. The following table includes the estimated fair value and carrying value of those assets and liabilities that are measured at fair value on a recurring and non-recurring basis, as well as the estimated fair value of the Partnership’s financial instruments that are not accounted for at fair value on a recurring basis.

												June 30, 2021												December 31, 2020
						Fair Value Hierarchy Level						Carrying Amount Asset (Liability) $						Fair Value Asset (Liability) $						Carrying Amount Asset (Liability) $						Fair Value Asset (Liability) $
Recurring:
Cash and cash equivalents and restricted cash (note 15)						Level 1						190,200						190,200						257,943						257,943
Derivative instruments (note 11)
Interest rate swap agreements – assets						Level 2						1,363						1,363						—						—
Interest rate swap agreements – liabilities						Level 2						(40,048)						(40,048)						(75,468)						(75,468)
Cross currency swap agreements – assets						Level 2						5,820						5,820						4,505						4,505
Cross currency swap agreements – liabilities						Level 2						(18,524)						(18,524)						(20,022)						(20,022)
Non-recurring:
Vessels and equipment						Level 2						—						—						40,717						40,717
Other:
Loans to equity-accounted joint ventures (note 7)						(i)						106,301						(i)						116,632						(i)
Long-term debt – public (note 8)						Level 1						(351,786)						(360,319)						(352,260)						(359,581)
Long-term debt – non-public (note 8)						Level 2						(1,065,593)						(1,084,437)						(1,119,953)						(1,137,050)
Obligations related to finance leases (note 5a)						Level 2						(1,305,055)						(1,386,363)						(1,340,922)						(1,456,927)

(i)The advances to equity-accounted joint ventures together with the Partnership’s equity investments in the joint ventures form the net aggregate carrying value of the Partnership’s interests in the joint ventures in these unaudited consolidated financial statements. The fair values of the individual components of such aggregate interests are not determinable.

Credit Loss, Financial Instrument

b) Credit Losses

For a description of the Partnership's exposure to potential credit losses under ASC 326, see Item 18 – Financial Statements: Note 3b to the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2020.

The following table includes the amortized cost basis of the Partnership’s direct interests in financing receivables and net investment in direct financing leases by class of financing receivables and by period of origination and their associated credit quality as at June 30, 2021 and December 31, 2020.

						Amortized Cost Basis by Origination Year
						Credit Quality Grade (1)						2020						2018						2016 and prior						Total
As at June 30, 2021												$						$						$						$
Direct financing leases
Tangguh Hiri and Tangguh Sago						Performing						—						—						326,166						326,166
Bahrain Spirit						Performing						—						210,795						—						210,795
												—						210,795						326,166						536,961
Loans to equity-accounted joint ventures
Exmar LPG Joint Venture						Performing						—						—						32,266						32,266
Bahrain LNG Joint Venture						Performing						—						—						73,375						73,375
Other						Performing						660						—						—						660
												660						—						105,641						106,301
												660						210,795						431,807						643,262
As at December 31, 2020
Direct financing leases
Tangguh Hiri and Tangguh Sago						Performing						—						—						332,308						332,308
Bahrain Spirit						Performing						—						211,939						—						211,939
												—						211,939						332,308						544,247
Loans to equity-accounted joint ventures
Exmar LPG Joint Venture						Performing						—						—						42,266						42,266
Bahrain LNG Joint Venture						Performing						—						—						73,375						73,375
Other						Performing						991						—						—						991
												991						—						115,641						116,632
												991						211,939						447,949						660,879

(1)For a description of how the Partnership's credit quality grades are determined see Item 18 – Financial Statements: Note 3b to the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2020. As at June 30, 2021 and December 31, 2020, all direct financing and sales-type leases held by the Partnership and the Partnership’s equity-accounted joint ventures had a credit quality grade of performing.

Changes in the Partnership's allowance for credit losses for the three and six months ended June 30, 2021 and 2020 are as follows:

			Direct Financing Leases (1) (2) $						Direct Financing and Sales-Type Leases and Other within Equity-Accounted Joint Ventures (1) (2) $						Loans to Equity-Accounted Joint Ventures (1) $						Guarantees of Debt (1) $						Total $
Three and Six Months Ended June 30, 2021
As at December 31, 2020			30,177						54,937						4,726						2,080						91,920
Provision for (reversal of) potential credit losses			4,436						6,677						(981)						218						10,350
As at March 31, 2021			34,613						61,614						3,745						2,298						102,270
Provision for (reversal of) potential credit losses			787						722						255						(298)						1,466
As at June 30, 2021			35,400						62,336						4,000						2,000						103,736
Three and Six Months Ended June 30, 2020
As at January 1, 2020			11,155						36,292						3,714						2,139						53,300
(Reversal of) provision for potential credit losses			(100)						8,980						—						—						8,880
As at March 31, 2020			11,055						45,272						3,714						2,139						62,180
Provision for (reversal of) potential credit losses			465						(423)						83						(288)						(163)
As at June 30, 2020			11,520						44,849						3,797						1,851						62,017

(1)For a description of how the credit loss provision for direct financing leases, direct financing and sales-type leases and other within equity-accounted joint ventures, loans to equity-accounted joint ventures and guarantees of debt was determined for the three and six months ended June 30, 2021 and 2020, see Item 18 – Financial Statements: Note 3b to the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2020.

(2)The change in credit loss provision of $0.8 million and $5.2 million for the Partnership's consolidated vessels for the three and six months ended June 30, 2021, respectively ($0.5 million and $0.4 million for the three and six months ended June 30, 2020, respectively), was included in other expense in the Partnership's consolidated statements of income. The change in the credit loss provision for the six months ended June 30, 2021 primarily reflects a decline in the estimated charter-free valuations for certain types of its liquefied natural gas (or LNG) carriers at the end of their time-charter contract which are accounted for as direct financing leases. These estimated future charter-free values are subject to change based on the underlying LNG shipping market fundamentals.

The change in credit loss provision of $0.7 million and $7.4 million for the three and six months ended June 30, 2021, respectively ($(0.4) million and $8.6 million for the three and six months ended June 30, 2020, respectively), relating to the direct financing and sales-type leases and other within the Partnership's equity-accounted joint ventures was included in equity income in the Partnership's consolidated statements of income. The change in credit loss provision for the six months ended June 30, 2021 primarily reflects a decline in the estimated charter-free valuations for certain types of LNG carriers at the end of their time-charter contract, which are accounted for as direct financing and sales-type leases.

The changes in the credit loss provision for the Partnership's consolidated vessels and the vessels within the Partnership's equity-accounted joint ventures for the six months ended June 30, 2021 do not reflect any material change in expectations of the charterers' ability to make their time-charter hire payments as they come due compared to the beginning of the year.

X

- Definition

The entire disclosure for credit loss on financial instrument measured at amortized cost basis, net investment in lease, off-balance sheet credit exposure, and available-for-sale debt security.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 326
-SubTopic 30
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=124269663&loc=SL82922895-210455

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 326
-SubTopic 20
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=124255953&loc=SL82919272-210447

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 326
-SubTopic 20
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=124255953&loc=SL82919236-210447

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 326
-SubTopic 20
-Section 50
-Paragraph 20
-URI http://asc.fasb.org/extlink&oid=124255953&loc=SL82919269-210447

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 326
-SubTopic 30
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=124269663&loc=SL82922888-210455

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 326
-SubTopic 20
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=124255953&loc=SL82919244-210447

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 326
-SubTopic 20
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=124255953&loc=SL82919230-210447

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- Definition

The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis.

+ References

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-Topic 820
-URI http://asc.fasb.org/topic&trid=2155941

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- Definition

The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures.

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