Debt

The following table summarizes the major components of debt at each balance sheet date (in millions) and provides the maturities and interest rate ranges of each major category as of March 31, 2016:


	March 31, 2016		December 31, 2015
$2.25 billion revolving credit facility, maturing July 2020 (weighted average interest rate of 1.4% at March 31, 2016)	$	458	$	20
Letter of credit facilities, maturing through December 2018		—		—
Canadian credit facility and term loan, maturing March 2019 (weighted average effective interest rate of 2.0% at March 31, 2016 and 2.2% at December 31, 2015)		353		84
Senior notes maturing through 2045, interest rates ranging from 2.60% to 7.75% (weighted average interest rate of 4.7% at March 31, 2016 and December 31, 2015)		6,039		6,050
Tax-exempt bonds, maturing through 2045, fixed and variable interest rates ranging from 0.4% to 5.7% (weighted average interest rate of 2.0% at March 31, 2016 and 1.9% at December 31, 2015)		2,418		2,447
Capital leases and other, maturing through 2055, interest rates up to 12%		328		328

		9,596		8,929
Current portion of long-term debt		524		253

	$	9,072	$	8,676

Debt Classification

As of March 31, 2016, we had $1,140 million of debt with stated maturities within 12 months and $381 million of tax-exempt bonds with term interest rate periods scheduled to expire within the next 12 months. Under U.S. Generally Accepted Accounting Principles (“GAAP”), these debt balances must be reported as “Current portion of long-term debt” unless the Company intends and has the ability to refinance the debt on a long-term basis. We have classified $997 million of these debt balances as long-term as of March 31, 2016 and the remaining $524 million is classified as current obligations. The classification of these debt balances as long-term is based on the following:

•

The Company intends to refinance the $500 million of 2.6% senior notes that mature in September 2016 on a long-term basis either by issuing new debt or by utilizing the forecasted available capacity of our long-term U.S. revolving credit facility (“$2.25 billion revolving credit facility”).

•

The Company generally uses available cash to repay borrowings outstanding under the $2.25 billion revolving credit facility and any remaining balances are maintained by extending the maturities of the borrowings. Our current projections indicate that the Company will maintain $116 million of the $458 million of outstanding borrowings for the next 12 months.

•

The Company expects to successfully remarket the $381 million of tax-exempt bonds with term interest rate periods expiring within the next 12 months. In the event of a failed remarketing, we have the intent and ability to use availability under our $2.25 billion revolving credit facility to fund the debt obligations until they can be remarketed successfully.

As of March 31, 2016, we also had $491 million of variable-rate tax-exempt bonds that are supported by letters of credit. The interest rates on these bonds are reset on either a daily or weekly basis through a remarketing process. All recent remarketings have successfully placed Company bonds with investors at reasonable, market-driven rates and we currently expect future remarketings to be successful. However, if the remarketing agent is unable to remarket our bonds, the remarketing agent can put the bonds to us. In the event of a failed remarketing, we have the intent and ability to use availability under our $2.25 billion revolving credit facility to fund the debt obligations until they can be remarketed successfully. Accordingly, we classified these borrowings as long-term in our Condensed Consolidated Balance Sheet at March 31, 2016.

Access to and Utilization of Credit Facilities

$2.25 Billion Revolving Credit Facility and Other Letter of Credit Facilities — As of March 31, 2016, we had an aggregate committed capacity of $2.4 billion for letters of credit under various U.S. credit facilities. Our $2.25 billion revolving credit facility expires in July 2020 and is our primary source of letter of credit capacity. Our remaining committed letter of credit capacity is provided under facilities with terms extending through December 2018. As of March 31, 2016, we had an aggregate of $965 million of letters of credit outstanding under various credit facilities. As of March 31, 2016, we had $458 million of outstanding borrowings under our $2.25 billion revolving credit facility and $815 million of letters of credit issued and supported by the facility, leaving $977 million of unused and available capacity.

Canadian Credit Facility and Term Loan — In March 2016, we amended and restated our Canadian credit agreement, decreasing the revolving credit capacity, increasing the amount of term credit, and extending the term through March 2019. Waste Management of Canada Corporation and WM Quebec Inc., wholly-owned subsidiaries of WM, are borrowers under the agreement. The amended and restated credit agreement provides the Company (i) C$50 million of revolving credit capacity, which can be used for borrowings or letters of credit, and (ii) C$460 million of non-revolving term credit that is prepayable without penalty. Prior to closing, there was a balance of C$90 million remaining on the prior C$500 million term loan. Upon closing, the term loan was fully drawn to repay the indebtedness owed under the prior Canadian credit agreement and to repay C$370 million of intercompany debt, which is further discussed below in Note 4. At no time during the three months ended March 31, 2016, did we have borrowings or letters of credit outstanding under the revolving credit agreement.

Debt Borrowings and Repayments

$2.25 Billion Revolving Credit Facility — During the three months ended March 31, 2016, we had net borrowings of $438 million under our $2.25 billion revolving credit facility. The proceeds from these borrowings were generally used to support our acquisition of certain operations and business assets of Southern Waste Systems/Sun Recycling (“SWS”) in Southern Florida. For additional information related to this acquisition, refer to Note 9.

Canadian Term Loan — During the three months ended March 31, 2016, we repaid C$27 million, or $20 million, of net advances under our prior Canadian term loan reducing the balance to C$90 million at the time of the amendment and restatement of the credit agreement. Upon closing the new Canadian credit agreement, we borrowed C$460 million, or $347 million, to repay the prior term loan and to allow our Canadian subsidiaries to repay C$370 million, or $280 million, of intercompany debt. The remaining increase in the carrying value of borrowings outstanding is due to foreign currency translation.

Senior Notes — During the first quarter of 2016, we repaid $10 million of our $600 million 6.1% senior notes due 2018 through an open market purchase. We recognized a $1 million pre-tax loss on early extinguishment of debt related to this transaction.

Tax-Exempt Bonds — We repaid $30 million of our tax-exempt bonds at their scheduled maturity with available cash during the three months ended March 31, 2016.

Senior Notes Refinancing

In the first quarter of 2015, we recognized a pre-tax loss of $550 million associated with the early extinguishment of almost $2 billion of our high-coupon senior notes through make whole redemption and cash tender offers. We replaced substantially all of the debt extinguished with new senior notes at significantly lower coupon interest rates and extended the weighted average duration of these debt obligations.