v3.19.2

long-term debt | 6 Months Ended
--- | ---
Jun. 30, 2019
long-term debt |
long-term debt | 26 long-term debt (a) Details of long-term debt
|  |  |  | June 30, |  | December 31,
As at (millions) |  | Note |  | 2019 |  | 2018
TELUS Corporation notes |  | (b) |  | $ | 13,715 |  | $ | 12,186
TELUS Corporation commercial paper |  | (c) |  |  | 293 |  |  | 774
TELUS Communications Inc. debentures |  |  |  |  | 621 |  |  | 620
TELUS International (Cda) Inc. credit facility |  | (e) |  |  | 396 |  |  | 419
|  |  |  |  | 15,025 |  |  | 13,999
Lease liabilities |  | (f) |  |  | 1,554 |  |  | 102
Long-term debt |  |  |  | $ | 16,579 |  | $ | 14,101
Current |  |  |  | $ | 1,564 |  | $ | 836
Non-current |  |  |  |  | 15,015 |  |  | 13,265
Long-term debt |  |  |  | $ | 16,579 |  | $ | 14,101
(b) TELUS Corporation notes The notes are senior unsecured and unsubordinated obligations and rank equally in right of payment with all of our existing and future unsecured unsubordinated obligations, are senior in right of payment to all of our existing and future subordinated indebtedness, and are effectively subordinated to all existing and future obligations of, or guaranteed by, our subsidiaries. The indentures governing the notes contain certain covenants that, among other things, place limitations on our ability, and the ability of certain of our subsidiaries, to: grant security in respect of indebtedness; enter into sale-leaseback transactions; and incur new indebtedness.
|  |  |  |  |  |  |  |  |  |  | Principal face amount |  | Redemption present
|  |  |  |  |  |  |  |  | Effective |  |  |  |  | Outstanding at |  | value spread
|  |  |  |  |  | Issue |  | interest |  | Originally |  | financial |  | Basis |  | Cessation
Series 1 |  | Issued |  | Maturity |  | price |  | rate 2 |  | issued |  | statement date |  | points |  | date
5.05% Notes, Series CH |  | July 2010 |  | July 2020 | 3 | $ | 997.44 |  | 5.08 | % | $ | 1.0 | billion | $ | 1.0 | billion | 47 | 4 | N/A
3.35% Notes, Series CJ |  | December 2012 |  | March 2023 |  | $ | 998.83 |  | 3.36 | % | $ | 500 | million | $ | 500 | million | 40 | 5 | Dec. 15, 2022
3.35% Notes, Series CK |  | April 2013 |  | April 2024 |  | $ | 994.35 |  | 3.41 | % | $ | 1.1 | billion | $ | 1.1 | billion | 36 | 5 | Jan. 2, 2024
4.40% Notes, Series CL |  | April 2013 |  | April 2043 |  | $ | 997.68 |  | 4.41 | % | $ | 600 | million | $ | 600 | million | 47 | 5 | Oct. 1, 2042
3.60% Notes, Series CM |  | November 2013 |  | January 2021 |  | $ | 997.15 |  | 3.65 | % | $ | 400 | million | $ | 400 | million | 35 | 5 | N/A
5.15% Notes, Series CN |  | November 2013 |  | November 2043 |  | $ | 995.00 |  | 5.18 | % | $ | 400 | million | $ | 400 | million | 50 | 5 | May 26, 2043
3.20% Notes, Series CO |  | April 2014 |  | April 2021 |  | $ | 997.39 |  | 3.24 | % | $ | 500 | million | $ | 500 | million | 30 | 5 | Mar. 5, 2021
4.85% Notes, Series CP |  | Multiple 6 |  | April 2044 |  | $ | 987.91 | 6 | 4.93 | % 6 | $ | 500 | million 6 | $ | 900 | million 6 | 46 | 5 | Oct. 5, 2043
3.75% Notes, Series CQ |  | September 2014 |  | January 2025 |  | $ | 997.75 |  | 3.78 | % | $ | 800 | million | $ | 800 | million | 38.5 | 5 | Oct. 17, 2024
4.75% Notes, Series CR |  | September 2014 |  | January 2045 |  | $ | 992.91 |  | 4.80 | % | $ | 400 | million | $ | 400 | million | 51.5 | 5 | July 17, 2044
2.35% Notes, Series CT |  | March 2015 |  | March 2022 |  | $ | 997.31 |  | 2.39 | % | $ | 1.0 | billion | $ | 1.0 | billion | 35.5 | 5 | Feb. 28, 2022
4.40% Notes, Series CU |  | March 2015 |  | January 2046 |  | $ | 999.72 |  | 4.40 | % | $ | 500 | million | $ | 500 | million | 60.5 | 5 | July 29, 2045
3.75% Notes, Series CV |  | December 2015 |  | March 2026 |  | $ | 992.14 |  | 3.84 | % | $ | 600 | million | $ | 600 | million | 53.5 | 5 | Dec. 10, 2025
2.80% U.S. Dollar Notes 7 |  | September 2016 |  | February 2027 |  | US$ | 991.89 |  | 2.89 | % | US$ | 600 | million | US$ | 600 | million | 20 | 8 | Nov. 16, 2026
3.70% U.S. Dollar Notes 9 |  | March 2017 |  | September 2027 |  | US$ | 998.95 |  | 3.71 | % | US$ | 500 | million | US$ | 500 | million | 20 | 8 | June 15, 2027
4.70% Notes, Series CW |  | Multiple 10 |  | March 2048 |  | $ | 998.06 | 10 | 4.71 | % 10 | $ | 325 | million 10 | $ | 475 | million 10 | 58.5 | 5 | Sept. 6, 2047
3.625% Notes, Series CX |  | February 2018 |  | March 2028 |  | $ | 989.49 |  | 3.75 | % | $ | 600 | million | $ | 600 | million | 37 | 5 | Dec. 1, 2027
4.60% U.S. Dollar Notes 11 |  | June 2018 |  | November 2048 |  | US$ | 987.60 |  | 4.68 | % | US$ | 750 | million | US$ | 750 | million | 25 | 8 | May 16, 2048
3.30% Notes, Series CY |  | April 2019 |  | May 2029 |  | $ | 991.75 |  | 3.40 | % | $ | 1.0 | billion | $ | 1.0 | billion | 43.5 | 5 | Feb. 2, 2029
4.30% U.S. Dollar Notes 12 |  | May 2019 |  | June 2049 |  | US$ | 990.48 |  | 4.36 | % | US$ | 500 | million | US$ | 500 | million | 25 | 8 | Dec. 15, 2048
2.75% Notes, Series CZ |  | July 2019 13 |  | July 2026 |  | $ | 998.73 |  | 2.77 | % | $ | 800 | million | $ | NIL |  | 33 | 5 | May 8, 2026
| (1) |  | Interest is payable semi-annually. The notes require us to make an offer to repurchase the notes at a price equal to 101% of their principal amount plus accrued and unpaid interest to the date of repurchase upon the occurrence of a change in control triggering event, as defined in the supplemental trust indenture.
| (2) |  | The effective interest rate is that which the notes would yield to an initial debt holder if held to maturity.
| (3) |  | On May 31, 2019, we exercised our right to early redeem, on July 23, 2019, $650 million of our 5.05% Notes, Series CH. On July 3, 2019, we exercised our right to early redeem, on August 7, 2019, the remaining $350 million not called for redemption on May 31, 2019. The long-term debt prepayment premium will be recorded in the three-month period ended September 30, 2019, and is estimated to be approximately $30 million before income taxes.
| (4) |  | The notes are redeemable at our option, in whole at any time, or in part from time to time, on not fewer than 30 and not more than 60 days’ prior notice. The redemption price is equal to the greater of (i) the present value of the notes discounted at the Government of Canada yield plus the redemption present value spread, or (ii) 100% of the principal amount thereof. In addition, accrued and unpaid interest, if any, will be paid to the date fixed for redemption.
| (5) |  | At any time prior to the respective maturity dates set out in the table, the notes are redeemable at our option, in whole at any time, or in part from time to time, on not fewer than 30 and not more than 60 days’ prior notice. The redemption price is equal to the greater of (i) the present value of the notes discounted at the Government of Canada yield plus the redemption present value spread calculated over the period to maturity, other than in the case of the Series CT, Series CU, Series CV, Series CW, Series CX, Series CY and Series CZ notes, for which it is calculated over the period to the redemption present value spread cessation date, or (ii) 100% of the principal amount thereof. In addition, accrued and unpaid interest, if any, will be paid to the date fixed for redemption. On or after the respective redemption present value spread cessation dates set out in the table, the notes are redeemable at our option, in whole but not in part, on not fewer than 30 and not more than 60 days’ prior notice, at redemption prices equal to 100% of the principal amounts thereof.
| (6) |  | $500 million of 4.85% Notes, Series CP were issued in April 2014 at an issue price of $998.74 and an effective interest rate of 4.86%. This series of notes was reopened in December 2015 and a further $400 million of notes were issued at an issue price of $974.38 and an effective interest rate of 5.02%.
| (7) |  | We have entered into a foreign exchange derivative (a cross currency interest rate exchange agreement) that effectively converted the principal payments and interest obligations to Canadian dollar obligations with a fixed interest rate of 2.95% and an issued and outstanding amount of $792 million (reflecting a fixed exchange rate of $1.3205).
| (8) |  | At any time prior to the respective maturity dates set out in the table, the notes are redeemable at our option, in whole at any time, or in part from time to time, on not fewer than 30 and not more than 60 days’ prior notice. The redemption price is equal to the greater of (i) the present value of the notes discounted at the U.S. Adjusted Treasury Rate plus the redemption present value spread calculated over the period to the redemption present value spread cessation date, or (ii) 100% of the principal amount thereof. In addition, accrued and unpaid interest, if any, will be paid to the date fixed for redemption. On or after the respective redemption present value spread cessation dates set out in the table, the notes are redeemable at our option, in whole but not in part, on not fewer than 30 and not more than 60 days’ prior notice, at redemption prices equal to 100% of the principal amounts thereof.
| (9) |  | We have entered into a foreign exchange derivative (a cross currency interest rate exchange agreement) that effectively converted the principal payments and interest obligations to Canadian dollar obligations with a fixed interest rate of 3.41% and an issued and outstanding amount of $667 million (reflecting a fixed exchange rate of $1.3348).
| (10) |  | $325 million of 4.70% Notes, Series CW were issued in March 2017 at an issue price of $990.65 and an effective interest rate of 4.76%. This series of notes was reopened in February 2018 and a further $150 million of notes were issued at an issue price of $1,014.11 and an effective interest rate of 4.61%.
| (11) |  | We have entered into a foreign exchange derivative (a cross currency interest rate exchange agreement) that effectively converted the principal payments and interest obligations to Canadian dollar obligations with a fixed interest rate of 4.41% and an issued and outstanding amount of $974 million (reflecting a fixed exchange rate of $1.2985).
| (12) |  | We have entered into a foreign exchange derivative (a cross currency interest rate exchange agreement) that effectively converted the principal payments and interest obligations to Canadian dollar obligations with a fixed interest rate of 4.27% and an issued and outstanding amount of $672 million (reflecting a fixed exchange rate of $1.3435).
| (13) |  | Issued subsequent to the statement of financial position date and prior to the date of issuance of these condensed interim consolidated financial statements.
(c) TELUS Corporation commercial paper TELUS Corporation has an unsecured commercial paper program, which is backstopped by our $2.25 billion syndicated credit facility (see (d)) and is to be used for general corporate purposes, including capital expenditures and investments. This program enables us to issue commercial paper, subject to conditions related to debt ratings, up to a maximum aggregate amount at any one time of $1.4 billion (December 31, 2018 – $1.4 billion). Foreign currency forward contracts are used to manage currency risk arising from issuing commercial paper denominated in U.S. dollars. Commercial paper debt is due within one year and is classified as a current portion of long-term debt, as the amounts are fully supported, and we expect that they will continue to be supported, by the revolving credit facility, which has no repayment requirements within the next year. As at June 30, 2019, we had $293 million of commercial paper outstanding, all of which was denominated in U.S. dollars (US$224 million), with an effective weighted average interest rate of 2.80%, maturing through October 2019. (d) TELUS Corporation credit facility As at June 30, 2019, TELUS Corporation had an unsecured revolving $2.25 billion bank credit facility, expiring on May 31, 2023 (December 31, 2018 – expiring on May 31, 2023), with a syndicate of financial institutions, which is to be used for general corporate purposes, including the backstopping of commercial paper. TELUS Corporation’s credit facility bears interest at prime rate, U.S. Dollar Base Rate, a bankers’ acceptance rate or London interbank offered rate (LIBOR) (all such terms as used or defined in the credit facility), plus applicable margins. The credit facility contains customary representations, warranties and covenants, including two financial quarter‑end ratio tests. These tests are that our net debt to operating cash flow ratio must not exceed 4.00:1.00 and our operating cash flow to interest expense ratio must not be less than 2.00:1.00, all as defined in the credit facility. Continued access to TELUS Corporation’s credit facility is not contingent upon TELUS Corporation maintaining a specific credit rating.
|  | June 30, |  | December 31,
As at (millions) |  | 2019 |  | 2018
Net available |  | $ | 1,957 |  | $ | 1,476
Backstop of commercial paper |  |  | 293 |  |  | 774
Gross available |  | $ | 2,250 |  | $ | 2,250
We had $182 million of letters of credit outstanding as at June 30, 2019 (December 31, 2018 – $184 million), issued under various uncommitted facilities; such letter of credit facilities are in addition to the ability to provide letters of credit pursuant to our committed bank credit facility. We had arranged $880 million of incremental letters of credit to allow us to participate in Innovation, Science and Economic Development Canada’s 600 MHz wireless spectrum auction that was held in March-April 2019, as discussed further in Note 18(a). Concurrent with funding the purchase of the spectrum licences these incremental letters of credit were extinguished. (e) TELUS International (Cda) Inc. credit facility As at June 30, 2019, TELUS International (Cda) Inc. had a bank credit facility, secured by its assets, expiring on December 20, 2022, with a syndicate of financial institutions. The credit facility is comprised of a US$350 million (December 31, 2018 – US$350 million) revolving component and an amortizing US$120 million (December 31, 2018 – US$120 million) term loan component. The credit facility is non-recourse to TELUS Corporation. The outstanding revolving component had a weighted average interest rate of 3.83% as at June 30, 2019.
|  | June 30, 2019 |  | December 31, 2018
|  | Revolving |  | Term loan |  |  |  |  | Revolving |  | Term loan |  |  |
As at (millions) |  | component |  | component 1 |  | Total |  | component |  | component |  | Total
Available |  | US$ | 153 |  | US$ | N/A |  | US$ | 153 |  | US$ | 150 |  | US$ | N/A |  | US$ | 150
Outstanding |  |  | 197 |  |  | 110 |  |  | 307 |  |  | 200 |  |  | 113 |  |  | 313
|  | US$ | 350 |  | US$ | 110 |  | US$ | 460 |  | US$ | 350 |  | US$ | 113 |  | US$ | 463
| (1) |  | We have entered into a receive-floating interest rate, pay-fixed interest rate exchange agreement that effectively converts our interest obligations on the debt to a fixed rate of 2.64%.
TELUS International (Cda) Inc.’s credit facility bears interest at prime rate, U.S. Dollar Base Rate, a bankers’ acceptance rate or London interbank offered rate (LIBOR) (all such terms as used or defined in the credit facility), plus applicable margins. The credit facility contains customary representations, warranties and covenants, including two financial quarter‑end ratio tests. These tests are that TELUS International (Cda) Inc.’s net debt to operating cash flow ratio must not exceed 3.25:1.00 and its operating cash flow to debt service (interest and scheduled principal repayment) ratio must not be less than 1.50:1.00, all as defined in the credit facility. The term loan is subject to an amortization schedule which requires that 5% of the principal advanced be repaid each year of the term of the agreement, with the balance due at maturity. (f) Lease liabilities See Note 2(a) for details of significant changes to IFRS-IASB which have been applied effective January 1, 2019. Lease liabilities are subject to amortization schedules, which results in the principal being repaid over various periods, including reasonably expected renewals. The weighted average interest rate on lease liabilities was approximately 4.59% as at June 30, 2019. (g) Long-term debt maturities Anticipated requirements to meet long-term debt repayments, calculated upon such long-term debts owing as at June 30, 2019, are as follows:
|  |  |  |  |  | Other |  |  |
|  | Canadian dollars |  | U.S. dollars |  | currencies |  |  |
|  | Long-term |  |  |  |  |  |  |  | Long-term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Debt, |  |  |  |  |  |  |  | Debt, |  |  |  |  | Currency swap agreement |  |  |  |  |  |  |  |  |
Composite long-term debt denominated in |  | excluding |  | Leases |  |  |  |  | excluding |  | Leases |  | amounts to be exchanged |  |  |  |  | Leases |  |  |
Years ending December 31 (millions) |  | leases |  | (Note 19) |  | Total |  | leases |  | (Note 19) |  | (Receive) 1 |  | Pay |  | Total |  | (Note 19) |  | Total
2019 (remainder of year) |  | $ | 1,000 |  | $ | 118 |  | $ | 1,118 |  | $ | 297 |  | $ | 8 |  | $ | (295) |  | $ | 296 |  | $ | 306 |  | $ | 13 |  | $ | 1,437
2020 |  |  | — |  |  | 225 |  |  | 225 |  |  | 8 |  |  | 16 |  |  | — |  |  | — |  |  | 24 |  |  | 29 |  |  | 278
2021 |  |  | 1,075 |  |  | 146 |  |  | 1,221 |  |  | 8 |  |  | 16 |  |  | — |  |  | — |  |  | 24 |  |  | 27 |  |  | 1,272
2022 |  |  | 1,249 |  |  | 115 |  |  | 1,364 |  |  | 381 |  |  | 15 |  |  | — |  |  | — |  |  | 396 |  |  | 19 |  |  | 1,779
2023 |  |  | 500 |  |  | 103 |  |  | 603 |  |  | — |  |  | 14 |  |  | — |  |  | — |  |  | 14 |  |  | 19 |  |  | 636
2024-2028 |  |  | 3,301 |  |  | 305 |  |  | 3,606 |  |  | 1,439 |  |  | 3 |  |  | (1,439) |  |  | 1,459 |  |  | 1,462 |  |  | 52 |  |  | 5,120
Thereafter |  |  | 4,275 |  |  | 290 |  |  | 4,565 |  |  | 1,636 |  |  | — |  |  | (1,636) |  |  | 1,646 |  |  | 1,646 |  |  | 20 |  |  | 6,231
Future cash outflows in respect of composite long-term debt principal repayments |  |  | 11,400 |  |  | 1,302 |  |  | 12,702 |  |  | 3,769 |  |  | 72 |  |  | (3,370) |  |  | 3,401 |  |  | 3,872 |  |  | 179 |  |  | 16,753
Future cash outflows in respect of associated interest and like carrying costs 2 |  |  | 5,463 |  |  | 397 |  |  | 5,860 |  |  | 2,615 |  |  | 14 |  |  | (2,558) |  |  | 2,510 |  |  | 2,581 |  |  | 54 |  |  | 8,495
Undiscounted contractual maturities (Note 4(b)) |  | $ | 16,863 |  | $ | 1,699 |  | $ | 18,562 |  | $ | 6,384 |  | $ | 86 |  | $ | (5,928) |  | $ | 5,911 |  | $ | 6,453 |  | $ | 233 |  | $ | 25,248
| (1) |  | Where applicable cash flows reflect foreign exchange rates as at June 30, 2019.
| (2) |  | F uture cash outflows in respect of associated interest and like carrying costs for commercial paper and amounts drawn under our credit facilities (if any) have been calculated based upon the rates in effect as at June 30, 2019.

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