Note 11 Long-Term Debt

(a) Carrying value of long-term debt instruments

As at December 31,

Issue date

Maturity date

Par value

2017

2016

4.70% Senior notes^(1),(3)

June 23, 2016

June 23, 2046

US$ 1,000

1,246

1,333

5.375% Senior notes^(2),(3)

March 4, 2016

March 4, 2046

US$ 750

928

994

3.527% Senior notes^(2),(3)

December 2, 2016

December 2, 2026

US$ 270

338

361

4.150% Senior notes^(2),(3)

March 4, 2016

March 4, 2026

US$ 1,000

1,246

1,333

4.90% Senior notes^(2),(3)

September 17, 2010

September 17, 2020

US$ 500

626

669

7.768% Medium-term notes⁽⁴⁾

April 8, 2009

April 8, 2019

$ 600

–

599

5.505% Medium-term notes⁽⁵⁾

June 26, 2008

June 26, 2018

$ 400

400

400

Other notes payable⁽⁶⁾

n/a

Total

4,785

5,696

⁽¹⁾	MFC may redeem the notes in whole, but not in part, on June 23, 2021 and thereafter on every June 23, at a redemption price equal to par, together with accrued and unpaid interest.

⁽²⁾

MFC may redeem the senior notes in whole or in part, at any time, at a redemption price equal to the greater of par and a price based on the yield of a corresponding U.S. Treasury bond plus a specified number of basis points. The specified number of basis points is as follows: 5.375% – 40 bps, 3.527% – 20 bps, 4.150% – 35 bps, and 4.90% – 35 bps.

⁽³⁾	These U.S. dollar senior notes have been designated as hedges of the Company’s net investment in its U.S. operations which reduces the earnings volatility that would otherwise arise from the re-measurement of these senior notes into Canadian dollars.

⁽⁴⁾	On October 6, 2017, MFC redeemed, prior to maturity, all of its outstanding 7.768% medium term notes due April 8, 2019. The early redemption premium of $44 before income taxes was recorded as interest expense.

⁽⁵⁾	MFC may redeem the medium-term notes in whole or in part, at any time, at a redemption price equal to the greater of par and a price based on the yield of a corresponding Government of Canada bond plus 39 basis points.

⁽⁶⁾	Other notes payable were substantially repaid during the year.

The cash amount of interest paid on long-term debt during the year ended December 31, 2017 was $324 (2016 – $191). Issue costs are amortized over the term of the debt.

(b) Fair value measurement

Fair value of a long-term debt instrument is determined using quoted market prices where available (Level 1). When quoted market prices are not available, fair value is determined with reference to quoted prices of a debt instrument with similar characteristics or estimated using discounted cash flows using observable market rates (Level 2).

Long-term debt is measured at amortized cost in the Consolidated Statements of Financial Position. Fair value of long-term debt as at December 31, 2017 was $5,187 (2016 – $6,100). Long-term debt was categorized in Level 2 of the fair value hierarchy (2016 – Level 2).

(c) Aggregate maturities of long-term debt



As at December 31,	2017		2016
Less than one year	$	401	$	7
One to two years		–		400
Two to three years		626		599
Three to four years		–		669
Four to five years		–		–
Greater than five years		3,758		4,021
Total	$	4,785	$	5,696