Debt and Borrowing Arrangements

9 Months Ended

Sep. 30, 2019

Note 9. Debt and Borrowing Arrangements

Short-Term Borrowings:

Our short-term borrowings and related weighted-average interest rates consisted of:



	As of September 30, 2019				As of December 31, 2018
	Amount Outstanding		Weighted- Average Rate		Amount Outstanding		Weighted- Average Rate
	(in millions)				(in millions)
Commercial paper	$	3,080	2.3	%	$	3,054	2.9	%
Bank loans	173		9.8	%	138		10.5	%
Total short-term borrowings	$	3,253			$	3,192

As of September 30, 2019, commercial paper issued and outstanding had between 1 and 72 days remaining to maturity. Commercial paper borrowings increased since year end primarily as a result of issuances to finance share repurchases during the year, dividend payments and the payment of long-term debt maturities.

Some of our international subsidiaries maintain primarily uncommitted credit lines to meet short-term working capital needs. Collectively, these credit lines amounted to $1.6 billion at September 30, 2019 and $1.7 billion at December 31, 2018. Borrowings on these lines were $173 million at September 30, 2019 and $138 million at December 31, 2018.

Borrowing Arrangements:

On September 13, 2019, Mondelez International Holdings Netherlands B.V. ("MIHNBV"), a wholly owned Dutch subsidiary of Mondelēz International, Inc., entered into a term loan agreement pursuant to which MIHNBV may incur up to $500 million of term loans with a three-year term and $500 million of term loans with a five-year term. Proceeds from the term loan may be used for general corporate purposes, including repayment of debt. As of September 30, 2019, no amounts were drawn on the term loans. On October 25, 2019, we fully drew on the term loans and received proceeds of $1.0 billion. We also entered into cross-currency swaps, serving as cash flow hedges, so that the U.S. dollar-denominated debt payments will effectively be paid in euros over the life of the debt.

On February 27, 2019, to supplement our commercial paper program, we entered into a $1.5 billion revolving credit agreement for a 364-day senior unsecured credit facility that is scheduled to expire on February 26, 2020. The agreement replaces our previous credit agreement that matured on February 27, 2019 and includes the same terms and conditions as our existing $4.5 billion multi-year credit facility discussed below. As of September 30, 2019, no amounts were drawn on the facility.

On February 27, 2019, we entered into a $4.5 billion multi-year senior unsecured revolving credit facility for general corporate purposes, including working capital needs, and to support our commercial paper program. This agreement replaced our $4.5 billion amended and restated five-year revolving credit agreement, dated as of October 14, 2016. The revolving credit agreement is scheduled to expire on February 27, 2024. The revolving credit agreement includes a covenant that we maintain a minimum shareholders' equity of at least $24.6 billion, excluding accumulated other comprehensive earnings/(losses), the cumulative effects of any changes in accounting principles and earnings/(losses) recognized in connection with the ongoing application of any mark-to-market accounting for pensions and other retirement plans. At September 30, 2019, we complied with this covenant as our shareholders' equity, as defined by the covenant, was $37.5 billion. The revolving credit facility also contains customary representations, covenants and events of default. There are no credit rating triggers, provisions or other financial covenants that could require us to post collateral as security. As of September 30, 2019, no amounts were drawn on the facility.

Long-Term Debt:

On October 2, 2019, MIHNBV issued €500 million of 0.875% euro-denominated notes guaranteed by Mondelēz International, Inc. that mature on October 1, 2031. We received €491 million (or $538 million) of proceeds, net of discounts and associated financing costs. The proceeds are earmarked for general corporate purposes, including repayment of debt. This debt transaction, including the receipt of proceeds, was recorded during the fourth quarter of 2019.

On September 19, 2019, MIHNBV issued $1.0 billion of U.S. dollar-denominated notes guaranteed by Mondelēz International, Inc. and consisting of $500 million 2.125% notes that mature on September 19, 2022 and $500 million 2.25% notes that mature on September 19, 2024. We received $997 million of proceeds, net of discounts and associated financing costs. The proceeds are earmarked for general corporate purposes, including repayment of debt. We recorded approximately $4 million of deferred financing costs and discounts, which will be amortized into interest expense over the life of the notes. In connection with this debt issuance, we entered into cross-currency swaps, serving as cash flow hedges, so that the U.S. dollar-denominated debt payments will effectively be paid in euros over the life of the debt.

On February 13, 2019, we issued $600 million of 3.625% U.S. dollar-denominated notes that are scheduled to mature February 13, 2026. We received $595 million of net proceeds that were used to repay outstanding commercial paper borrowings and other debt. We recorded approximately $5 million of discounts and deferred financing costs, which will be amortized into interest expense over the life of the notes.

On February 1, 2019, $400 million of our U.S. dollar variable rate notes matured. The notes and accrued interest to date were paid with the issuance of commercial paper and cash on hand.

Our weighted-average interest rate on our total debt was 2.2% as of September 30, 2019, 2.3% as of December 31, 2018 and 2.1% as of December 31, 2017.

Fair Value of Our Debt:

The fair value of our short-term borrowings at September 30, 2019 and December 31, 2018 reflects current market interest rates and approximates the amounts we have recorded on our condensed consolidated balance sheets. The fair value of our long-term debt was determined using quoted prices in active markets (Level 1 valuation data) for the publicly traded debt obligations. At September 30, 2019, the aggregate fair value of our total debt was $20,527 million and its carrying value was $19,520 million. At December 31, 2018, the aggregate fair value of our total debt was $18,650 million and its carrying value was $18,372 million.

Interest and Other Expense, net:

Interest and other expense, net consisted of:



	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
	(in millions)
Interest expense, debt	$	121		$	117		$	371		$	334
Loss on debt extinguishment	—			—			—			140
Loss/(gain) related to interest rate swaps	111			(1		)	111			(10		)
Other (income)/expense, net	(27		)	(30		)	(96		)	(50		)
Interest and other expense, net	$	205		$	86		$	386		$	414

Other income includes amounts related to our net investment hedge derivative contracts that are excluded from hedge effectiveness and totaled $34 million and $101 million for the three and nine months ended September 30, 2019 and $34 million and $84 million for the three and nine months ended September 30, 2018.