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Debt | 12 Months Ended
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Dec. 31, 2017
Debt |
Debt | 7. Debt The following table summarizes the major components of debt as of each balance sheet date (in millions) and provides the maturities and interest rate ranges of each major category as of December 31:
|  | 2017 |  | 2016
$2.25 billion revolving credit facility, maturing July 2020 (weighted average interest rate of 1.9% as of December 31, 2016) |  | $ | — |  | $ | 426
Commercial paper program (weighted average interest rate of 1.9% as of December 31, 2017) |  |  | 515 |  |  | —
Canadian term loan and revolving credit facility, maturing March 2019 (weighted average effective interest rate of 2.5% as of December 31, 2017 and 2.1% as of December 31, 2016) |  |  | 113 |  |  | 239
Senior notes, maturing through 2045, interest rates ranging from 2.4% to 7.75% (weighted average interest rate of 4.3% as of December 31, 2017 and 4.6% as of December 31, 2016) |  |  | 6,184 |  |  | 6,033
Tax-exempt bonds, maturing through 2045, fixed and variable interest rates ranging from 1.2% to 5.7% (weighted average interest rate of 2.0% as of December 31, 2017 and 1.8% as of December 31, 2016) |  |  | 2,352 |  |  | 2,304
Capital leases and other, maturing through 2055, interest rates up to 12% |  |  | 327 |  |  | 308
|  |  | 9,491 |  |  | 9,310
Current portion of long-term debt |  |  | 739 |  |  | 417
|  | $ | 8,752 |  | $ | 8,893
Debt Classification As of December 31, 2017, the current portion of our long-term debt balance of $739 million includes (i) $515 million of short-term borrowings under our commercial paper program and (ii) $224 million of other debt with scheduled maturities within the next 12 months, including $167 million of tax-exempt bonds. We have $831 million of tax-exempt bonds with term interest rate periods that expire within the next 12 months and an additional $328 million of variable-rate tax-exempt bonds that are supported by letters of credit. The interest rates on our variable-rate tax-exempt bonds are generally reset on either a daily or weekly basis through a remarketing process. All recent tax-exempt bond remarketings have successfully placed Company bonds with investors at 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 refinance these bonds on a long-term basis as supported by the forecasted available capacity under our long-term U.S. revolving credit facility (“$2.25 billion revolving credit facility”). Accordingly, we have classified these borrowings as long-term in our Consolidated Balance Sheet as of December 31, 2017. Access to and Utilization of Credit Facilities and Commercial Paper Program $2.25 Billion Revolving Credit Facility — Our $2.25 billion revolving credit facility maturing in July 2020 provides us with credit capacity to be used for either cash borrowings or to support letters of credit or commercial paper. The rates we pay for outstanding loans are generally based on LIBOR plus a spread depending on the Company’s debt rating assigned by Moody’s Investors Service and Standard and Poor’s. The spread above LIBOR ranges from 0.805% to 1.3%. As of December 31, 2017, we had no outstanding borrowings under this facility. We had $642 million of letters of credit issued and $515 million of outstanding borrowings under our commercial paper program, both supported by this facility, leaving unused and available credit capacity of $1,093 million as of December 31, 2017. Commercial Paper Program — We have a $1.5 billion commercial paper program that enables us to borrow funds for up to 397 days at competitive interest rates. The rates we pay for outstanding borrowings are based on the term of the notes. The commercial paper program is fully supported by our $2.25 billion revolving credit facility. As of December 31, 2017, we had $515 million of outstanding borrowings under our commercial paper program. Canadian Term Loan and Revolving Credit Facility — We have a Canadian credit agreement (which includes a term loan and revolving credit facility) that matures in March 2019. Waste Management of Canada Corporation and WM Quebec Inc., indirect wholly-owned subsidiaries of WM, are borrowers under this agreement. This 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 and principal amounts repaid may not be reborrowed. The rates we pay for outstanding loans under the Canadian credit agreement are generally based on the applicable LIBOR plus a spread depending on the Company’s debt rating assigned by Moody’s Investors Service and Standard and Poor’s. The spread above LIBOR ranges from 0.875% to 1.5%. As of December 31, 2017 and 2016, we had C$142 million, or $113 million, and C$321 million, or $239 million, respectively, of outstanding borrowings under our Canadian term loan. As of December 31, 2017 and 2016, we had no borrowings or letters of credit outstanding under the Canadian revolving credit facility. Other Letter of Credit Facilities — As of December 31, 2017 and 2016, we had utilized $507 million and $492 million, respectively, of other letter of credit facilities, which are both committed and uncommitted, with terms extending through December 2018. Debt Borrowings and Repayments $2.25 Billion Revolving Credit Facility — During the year ended December 31, 2017, we had net repayments of $703 million under our $2.25 billion revolving credit facility, including a $277 million repayment of an initial borrowing of $277 million used to fund the insurance premiums for a wholly-owned insurance captive. These borrowings were directly deposited into a restricted escrow account to be used solely for paying insurance claims. Accordingly, the restricted funds provided by these financing activities have not been included in new borrowings in our Consolidated Statement of Cash Flows. Commercial Paper Program — During the year ended December 31, 2017, we had net cash borrowings of $513 million (net of the related discount on issuance) for general corporate purposes. Canadian Term Loan — During the year ended December 31, 2017, we repaid C$179 million, or $137 million, of net advances under our Canadian term loan with available cash. The remaining change in the carrying value of outstanding borrowings under our Canadian term loan is due to foreign currency translation. Senior Notes — In November 2017, we issued $750 million of 3.15% senior notes that mature in November 2027. We utilized the net proceeds of $745 million to repay $590 million of 6.1% senior notes ahead of their scheduled maturity date of March 2018, with the remaining net proceeds used for general corporate purposes. The $6 million loss on early extinguishment of debt reflected in our Consolidated Statement of Operations for the year ended December 31, 2017 relates to this early repayment. Tax-Exempt Bonds — During the year ended December 31, 2017, we repaid $127 million of our tax-exempt bonds with available cash at their scheduled maturities. In December 2017, we elected to refund and reissue $124 million of tax-exempt bonds in order to reduce the interest costs associated with this debt. We issued $175 million of tax-exempt bonds in 2017. The proceeds from the issuance of these bonds were deposited directly into a trust fund and may only be used for the specific purpose for which the money was raised, which is generally to finance expenditures for landfill and solid waste disposal facility construction and development. Accordingly, the restricted funds provided by these financing activities have not been included in new borrowings in our Consolidated Statement of Cash Flows. Capital Leases and Other — During the year ended December 31, 2017, we had $87 million in new capital leases to support new business opportunities, partially offset by net cash repayments of $68 million of other debt. Scheduled Debt Payments Principal payments of our debt and capital leases for the next five years and thereafter, based on scheduled maturities are as follows: $737 million in 2018, $302 million in 2019, $754 million in 2020, $549 million in 2021, $592 million in 2022 and $6,667 million thereafter. Our recorded debt and capital lease obligations include non-cash adjustments associated with debt issuance costs, discounts, premiums and fair value adjustments attributable to terminated interest rate derivatives, which have been excluded from these amounts because they will not result in cash payments. Cross-Currency Swaps In March 2016, our Canadian subsidiaries repaid C$370 million of intercompany debt to WM Holdings with proceeds from our Canadian term loan. Concurrent with the repayment of the intercompany debt, we terminated the related cross-currency swaps and received $67 million in cash. The cash received from our termination of these swaps was classified as a change in other current assets and other assets within net cash provided by operating activities in the Consolidated Statement of Cash Flows. In addition, we recognized $8 million of expense associated with the termination of these swaps in 2016, which was included in other, net in the Consolidated Statement of Operations. Senior Notes Refinancing During 2015, we recognized a pre-tax loss of $552 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. Secured Debt Our debt balances are generally unsecured, except for capital leases and the note payable associated with our investment in low-income housing properties. Debt Covenants Our $2.25 billion revolving credit facility, our Canadian credit agreement and certain other financing agreements contain financial covenants. The following table summarizes the most restrictive requirements of these financial covenants (all terms used to measure these ratios are defined by the facilities):
Interest coverage ratio |  | > 2.75 to 1
Total debt to EBITDA |  | < 3.50 to 1
Our credit facilities and senior notes also contain certain restrictions intended to monitor our level of subsidiary indebtedness, types of investments and net worth. We monitor our compliance with these restrictions, but do not believe that they significantly impact our ability to enter into investing or financing arrangements typical for our business. As of December 31, 2017 and 2016, we were in compliance with the covenants and restrictions under all of our debt agreements that may have a material effect on our Consolidated Financial Statements.

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- Definition The entire disclosure for debt and capital lease obligations can be reported. Information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. Also includes descriptions and amounts of capital leasing arrangements that consist of direct financing, sales type and leveraged leases. Disclosure may include the effect on the balance sheet and the income statement resulting from a change in lease classification for leases that at inception would have been classified differently had guidance been in effect at the inception of the original lease. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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