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Debt | 12 Months Ended
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Dec. 31, 2020
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:
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2020 |  | 2019
Commercial paper program (weighted average interest rate of 0.4% as of December 31, 2020) | ​ | $ | 1,814 | ​ | $ | —
Senior notes, maturing through 2050, interest rates ranging from 0.75% to 7.75% (weighted average interest rate of 3.3% as of December 31, 2020 and 3.9% as of December 31, 2019) | ​ |  | 8,465 | ​ |  | 9,965
Canadian senior notes, C$500 million maturing September 2026, interest rate of 2.6% | ​ | ​ | 393 | ​ | ​ | 385
Tax-exempt bonds, maturing through 2048, fixed and variable interest rates ranging from 0.1% to 4.3% (weighted average interest rate of 1.7% as of December 31, 2020 and 2.3% as of December 31, 2019) | ​ |  | 2,571 | ​ |  | 2,523
Financing leases and other, maturing through 2085, weighted average interest rate of 4.6% (a) | ​ |  | 652 | ​ |  | 710
Debt issuance costs, discounts and other | ​ |  | (85) | ​ |  | (85)
​ | ​ |  | 13,810 | ​ |  | 13,498
Current portion of long-term debt | ​ |  | 551 | ​ |  | 218
​ | ​ | $ | 13,259 | ​ | $ | 13,280
(a) | Excluding our landfill financing leases, the maturities of our financing leases and other debt obligations extend through 2059.
Debt Classification As of December 31, 2020, we had $3.3 billion of debt maturing within the next 12 months, including (i) $1.8 billion of short-term borrowings under our commercial paper program; (ii) $1.2 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities, and (iii) $242 million of other debt with scheduled maturities within the next 12 months, including $127 million of tax-exempt bonds. As of December 31, 2020, we have classified $2.7 billion of debt maturing in the next 12 months as long-term because we have the intent and ability to refinance these borrowings on a long-term basis as supported by the forecasted available capacity under our $3.5 billion long-term U.S. and Canadian revolving credit facility (“$3.5 billion revolving credit facility”), as discussed below. The remaining $551 million of debt maturing in the next 12 months is classified as current obligations. As of December 31, 2020, we also had $54 million of variable-rate tax-exempt bonds with long-term scheduled maturities supported by letters of credit under our $3.5 billion revolving credit facility. 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 availability under our $3.5 billion revolving credit facility to fund these bonds until they are remarketed successfully. Accordingly, we have classified the $54 million of variable-rate tax-exempt bonds with maturities of more than one year as long-term in our Consolidated Balance Sheet as of December 31, 2020. Access to and Utilization of Credit Facilities and Commercial Paper Program $3.0 Billion, 364-Day Revolving Credit Facility — On July 28, 2020, we entered into a supplemental $3.0 billion, 364-day, U.S. revolving credit facility (“364-day revolving credit facility”), which was drawn upon and used to partially fund our acquisition of Advanced Disposal, discussed further in Note 18, and refinancing of indebtedness. During the fourth quarter of 2020, we repaid the outstanding borrowings under our 364-day revolving credit facility and contemporaneously terminated the facility, at which time we recognized a $2 million loss on early extinguishment of debt in our Consolidated Statement of Operations related to unamortized debt issuance costs. $3.5 Billion Revolving Credit Facility — Our $3.5 billion revolving credit facility, maturing November 2024, provides us with credit capacity to be used for cash borrowings, to support letters of credit and to support our commercial paper program. The agreement provides the Company with two one-year extension options. Waste Management of Canada Corporation and WM Quebec Inc., each an indirect wholly-owned subsidiary of WM, are borrowers under the $3.5 billion revolving credit facility, and the agreement permits borrowing in Canadian dollars up to the U.S. dollar equivalent of $375 million, with such borrowings to be repaid in Canadian dollars. WM Holdings, a wholly-owned subsidiary of WM, guarantees all the obligations under the $3.5 billion revolving credit facility. The rates we pay for outstanding U.S. or Canadian loans are generally based on LIBOR or CDOR, respectively, plus a spread depending on the Company’s debt rating assigned by Moody’s Investors Service and Standard and Poor’s. As of December 31, 2020, we had no outstanding borrowings under this facility. We had $270 million of letters of credit issued and $1.8 billion of outstanding borrowings (net of related discount on issuance) under our commercial paper program, both supported by this facility, leaving unused and available credit capacity of $1.4 billion as of December 31, 2020. Commercial Paper Program — We have a 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 $3.5 billion revolving credit facility. As of December 31, 2020, we had $1.8 billion of outstanding borrowings (net of related discount on issuance) under our commercial paper program. Other Letter of Credit Lines — As of December 31, 2020, we had utilized $566 million of other uncommitted letter of credit lines with terms maturing through April 2022. Debt Borrowings and Repayments 364-Day Revolving Credit Facility — In October 2020, we borrowed $3.0 billion under this revolving credit facility to partially fund our acquisition of Advanced Disposal, discussed further in Note 18. Upon closing our acquisition of Advanced Disposal on October 30, 2020, we repaid $870 million of borrowings primarily with proceeds from the sale of certain net assets to GFL Environmental, discussed further in Note 18, and to a lesser extent, available cash on hand. In November 2020, we repaid the remainder of outstanding borrowings with proceeds from our November 2020 issuance of senior notes discussed below, and we contemporaneously terminated this facility, at which time we recognized a $2 million loss on early extinguishment of debt in our Consolidated Statement of Operations related to unamortized debt issuance costs. Commercial Paper Program — During the year ended December 31, 2020, we had net cash borrowings of $1.8 billion (net of related discount on issuance), the proceeds of which were used for the redemption of senior notes discussed further below and to partially fund our acquisition of Advanced Disposal. Senior Notes — In May 2019, we issued $4.0 billion of senior notes, $3.0 billion of which were due 2024, 2026, 2029 and 2039 and included a special mandatory redemption feature (the “SMR Notes”). The SMR Notes were issued with the intention to partially fund our acquisition of Advanced Disposal. Pursuant to the terms of the SMR Notes, we were required to redeem all of such outstanding notes, paying debt holders 101% of the aggregate principal amounts of such notes, plus accrued but unpaid interest, as a result of the acquisition not being completed by July 14, 2020. Accordingly, the redemption was completed on July 20, 2020 using available cash on hand and, to a lesser extent, commercial paper borrowings. The cash paid included the $3.0 billion principal amount of debt redeemed, $30 million of related premiums and $8 million of accrued interest. We recognized a $52 million loss on early extinguishment of debt in our Consolidated Statement of Operations related to the redemption during the third quarter of 2020, including $30 million of premiums paid and $22 million of unamortized discounts and debt issuance costs. ​ In November 2020, WM issued $2.5 billion of senior notes consisting of: ​
| ● | $500 million of 0.750% senior notes due November 15, 2025;
| ● | $500 million of 1.150% senior notes due March 15, 2028;
| ● | $1.0 billion of 1.500% senior notes due March 15, 2031 and
| ● | $500 million of 2.500% senior notes due November 15, 2050.
​ The net proceeds from these debt issuances were $2.48 billion. We used the net proceeds to repay the remaining outstanding borrowings under our 364-day revolving credit facility as discussed above, to redeem our $400 million aggregate principal amount of 4.60% senior notes due March 2021, including $5 million of accrued but unpaid interest, and for general corporate purposes. ​ In June 2020, we repaid $600 million of 4.75% senior notes with available cash at their scheduled maturity. ​ Advanced Disposal Senior Notes — At the time of acquisition, Advanced Disposal had outstanding $425 million of 5.625% senior notes due November 2024, the fair value of which was $438 million, representing our carrying value upon acquisition due to purchase accounting. Upon closing of the acquisition of Advanced Disposal, the Company gave notice of redemption of the Advanced Disposal senior notes, pursuant to an optional redemption feature. The redemption was completed on November 30, 2020 using borrowings under our 364-day revolving credit facility and our commercial paper program. Pursuant to the optional redemption feature, we redeemed such outstanding notes for 102.813% of the aggregate principal amount, or $437 million, and $13 million of accrued but unpaid interest. Upon redemption, we recognized a $1 million gain on early extinguishment of debt in our Consolidated Statement of Operations due to the difference in carrying value and redemption price. ​ Tax-Exempt Bonds — We issued $131 million of new tax-exempt bonds in 2020. The proceeds from the issuance of these bonds were deposited directly into a restricted 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. In the third quarter of 2020, we elected to refund and reissue $130 million of tax-exempt bonds. Additionally, during the year ended December 31, 2020, we repaid $82 million of our tax-exempt bonds with available cash at their scheduled maturities. Financing Leases and Other — The decrease in 2020 is due to $108 million of cash repayments primarily related to our federal low-income housing investments, financing leases and other obligations, partially offset by an increase of $50 million mainly associated with non-cash financing leases and our acquisition of Advanced Disposal. Scheduled Debt Payments Principal payments of our debt for the next five years and thereafter, based on scheduled maturities are as follows: $2,056 million in 2021, $665 million in 2022, $647 million in 2023, $468 million in 2024, $1,451 million in 2025 and $8,700 million thereafter. Our recorded debt and financing 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. See Note 8 below for further discussion of our financing lease arrangements. Secured Debt Our debt balances are generally unsecured, except for financing leases and the notes payable associated with our investments in low-income housing properties. Debt Covenants The terms of certain of our financing arrangements require that we comply with financial and other covenants. Our most restrictive financial covenant is the one contained in our $3.5 billion revolving credit facility, which sets forth a maximum total debt to consolidated earnings before interest, taxes, depreciation and amortization ratio (the “Leverage Ratio”). This covenant requires that the Leverage Ratio for the preceding four fiscal quarters will not be more than 3.75 to 1, provided that if an acquisition permitted under the $3.5 billion revolving credit facility involving aggregate consideration in excess of $200 million occurs during the fiscal quarter, the Company shall have the right to increase the Leverage Ratio to 4.25 to 1 during such fiscal quarter and for the following three fiscal quarters (the “Elevated Leverage Ratio Period”). Given the strength of the Company’s financial position and its expectation to maintain significant headroom within the Leverage Ratio, the Company has not elected to increase the Leverage Ratio for an Elevated Leverage Ratio Period since the acquisition of Advanced Disposal. There shall be no more than two Elevated Leverage Ratio Periods during the term of the $3.5 billion revolving credit facility, and the Leverage Ratio must return to 3.75 to 1 for at least one fiscal quarter between Elevated Leverage Ratio Periods. The calculation of all components used in the Leverage Ratio covenant are as defined in the $3.5 billion revolving credit facility. Our $3.5 billion revolving credit facility, senior notes and other financing arrangements also contain certain restrictions on the ability of the Company’s subsidiaries to incur additional indebtedness as well as restrictions on the ability of the Company and its subsidiaries to, among other things, incur liens; engage in sale-leaseback transactions and engage in mergers and consolidations. 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, 2020 and 2019, we were in compliance with all covenants and restrictions under our financing arrangements 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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