Borrowings

The Partnership borrows and enters into credit agreements for its general operating and investment purposes. The Partnership’s debt obligations consist of the following (Dollars in millions):



	September 30, 2017				December 31, 2016
	Borrowing Outstanding		Carrying Value		Borrowing Outstanding		Carrying Value
Senior Credit Facility Term Loan Due 5/05/2020	$	25.0	$	24.8	$	25.0	$	24.7
CLO Term Loans(See below)	229.9		229.9		33.8		33.8
3.875% Senior Notes Due 2/01/2023	500.0		497.5		500.0		497.2
5.625% Senior Notes Due 3/30/2043	600.0		600.7		600.0		600.7
Promissory Note Due 1/01/2022	108.8		108.8		108.8		108.8
Promissory Notes Due 7/15/2019	53.9		53.9		—		—
Total debt obligations	$	1,517.6	$	1,515.6	$	1,267.6	$	1,265.2

Senior Credit Facility

As of September 30, 2017, the senior credit facility included $25.0 million in a term loan and $750.0 million in a revolving credit facility. As of September 30, 2017, the term loan and revolving credit facility were scheduled to mature on May 5, 2020. Principal amounts outstanding under the term loan and revolving credit facility accrue interest, at the option of the borrowers, either (a) at an alternate base rate plus an applicable margin not to exceed 0.75%, or (b) at LIBOR plus an applicable margin not to exceed 1.75% (at September 30, 2017, the interest rate was 2.49%). There was no amount outstanding under the revolving credit facility at September 30, 2017. Interest expense under the senior credit facility was not significant for the three and nine months ended September 30, 2017 and 2016. The fair value of the outstanding balances of the term loan and revolving credit facility at September 30, 2017 and December 31, 2016 approximated par value based on current market rates for similar debt instruments and are classified as Level III within the fair value hierarchy.

On April 6, 2017, the Partnership borrowed $250.0 million against the $750.0 million revolving credit facility. This amount was repaid in full on June 2, 2017.

CLO Term Loans

For certain of our CLOs, the Partnership finances a portion of its investment in the CLOs through the proceeds received from term loans with financial institutions. The Partnership's outstanding CLO term loans consist of the following (Dollars in millions):



Formation Date	Borrowing Outstanding September 30, 2017			Borrowing Outstanding December 31, 2016			Maturity Date (1)	Interest Rate as of September 30, 2017
October 3, 2013	$	—	(2)	$	13.2	(2)	September 28, 2018	NA	(3)
June 7, 2016	20.6			20.6			July 15, 2027	3.10%	(4)
February 28, 2017	73.0			—			September 21, 2029	2.33%	(5)
April 19, 2017	22.8			—			April 22, 2031	3.24%	(6) (12)
June 28, 2017	23.1			—			July 22, 2031	3.25%	(7) (12)
July 20, 2017	24.4			—			April 21, 2027	2.84%	(8) (12)
August 2, 2017	22.8			—			July 23, 2029	3.10%	(9) (12)
August 2, 2017	20.6			—			August 3, 2022	1.75%	(10)
August 14, 2017	22.6			—			August 15, 2030	3.16%	(11) (12)
	$	229.9		$	33.8

(1) Maturity date is earlier of date indicated or the date that the CLO is dissolved.

(2) Original borrowing of €12.6 million.

(3) Note paid off in the third quarter of 2017.


(4)	Incurs interest at the weighted average rate of the underlying senior notes. Interest income on the underlying collateral approximated the amount of interest expense and was not significant for the three and nine months ended September 30, 2017 and 2016.


(5)	Original borrowing of €61.8 million; incurs interest at EURIBOR plus applicable margins as defined in the agreement.


(6)	Incurs interest at LIBOR plus 1.932%.


(7)	Incurs interest at LIBOR plus 1.923%.


(8)	Incurs interest at LIBOR plus 1.536%.


(9)	Incurs interest at LIBOR plus 1.808%.


(10)	Original borrowing of €17.4 million; incurs interest at LIBOR plus 1.75% and has full recourse to the Partnership.


(11)	Incurs interest at LIBOR plus 1.848%.


(12)	Term loan issued under master credit agreement.

The CLO term loans are secured by the Partnership's investments in the respective CLO, have a general unsecured interest in the Carlyle entity that manages the CLO, and generally do not have recourse to any other Carlyle entity. Interest expense on these term loans was not significant for the three and nine months ended September 30, 2017 and 2016. The fair value of the outstanding balance of the CLO term loans at September 30, 2017 approximated par value based on current market rates for similar debt instruments. These CLO term loans are classified as Level III within the fair value hierarchy.

European CLO Financing - February 28, 2017

On February 28, 2017, a subsidiary of the Partnership entered into a financing agreement with several financial institutions under which these financial institutions provided a €61.8 million term loan ($73.0 million at September 30, 2017) to the Partnership. This term loan is secured by the Partnership’s investments in the retained notes in certain European CLOs that were formed in 2014 and 2015. This term loan will mature on the earlier of September 21, 2029 or the date that the certain European CLO retained notes have been redeemed. The Partnership may prepay the term loan in whole or in part at any time after the third anniversary of the date of issuance without penalty. Prepayment of the term loan within the first three years will incur a penalty based on the prepayment amount. Interest on this term loan accrues at EURIBOR plus applicable margins (2.33% at September 30, 2017).

Master Credit Agreement - Term Loans

In January 2017, the Partnership entered into a master credit agreement with a financial institution under which the financial institution expects to provide term loans to the Partnership for the purchase of eligible interests in CLOs. This agreement will terminate in January 2020. Any term loan to be issued under this master credit agreement will be secured by the Partnership’s investment in the respective CLO as well as any senior management fee and subordinated management fee payable by each CLO. Any term loan will bear interest at LIBOR plus a weighted average spread over LIBOR on the CLO notes and an applicable margin. Interest will be due quarterly.

3.875% Senior Notes

In January 2013, an indirect finance subsidiary of the Partnership issued $500.0 million in aggregate principal amount of 3.875% senior notes due February 1, 2023 at 99.966% of par. Interest is payable semi-annually on February 1 and August 1, beginning August 1, 2013. This subsidiary may redeem the senior notes in whole at any time or in part from time to time at a price equal to the greater of 100% of the principal amount of the notes being redeemed and the sum of the present values of the remaining scheduled payments of principal and interest on any notes being redeemed discounted to the redemption date on a semi-annual basis at the Treasury rate plus 30 basis points plus accrued and unpaid interest on the principal amounts being redeemed to the redemption date.

Interest expense on the notes was $5.0 million for both the three months ended September 30, 2017 and 2016, and $14.9 million for both the nine months ended September 30, 2017 and 2016. At September 30, 2017 and December 31, 2016, the fair value of the notes, including accrued interest, was approximately $520.8 million and $512.8 million, respectively, based on indicative quotes. The notes are classified as Level II within the fair value hierarchy.

5.625% Senior Notes

In March 2013, an indirect finance subsidiary of the Partnership issued $400.0 million in aggregate principal amount of 5.625% senior notes due March 30, 2043 at 99.583% of par. Interest is payable semi-annually on March 30 and September 30, beginning September 30, 2013. This subsidiary may redeem the senior notes in whole at any time or in part from time to time at a price equal to the greater of 100% of the principal amount of the notes being redeemed and the sum of the present values of the remaining scheduled payments of principal and interest on any notes being redeemed discounted to the redemption date on a semi-annual basis at the Treasury rate plus 40 basis points plus accrued and unpaid interest on the principal amounts being redeemed to the redemption date.

In March 2014, an indirect finance subsidiary of the Partnership issued $200.0 million of 5.625% Senior Notes due March 30, 2043 at 104.315% of par. These notes were issued as additional 5.625% Senior Notes and are treated as a single class with the already outstanding $400.0 million aggregate principal amount of these senior notes.

Interest expense on the notes was $8.4 million for both the three months ended September 30, 2017 and 2016 and $25.3 million for both the nine months ended September 30, 2017 and 2016. At September 30, 2017 and December 31, 2016, the fair value of the notes, including accrued interest, was approximately $688.7 million and $603.1 million, respectively, based on indicative quotes. The notes are classified as Level II within the fair value hierarchy.

Promissory Notes

Promissory Note Due January 1, 2022

On January 1, 2016, the Partnership issued a $120.0 million promissory note to BNRI as a result of a contingent consideration arrangement entered into in 2012 between the Partnership and BNRI as part of the Partnership's strategic investment in NGP (see Note 5). Interest on the promissory note accrues at the three month LIBOR plus 2.50% (3.83% at September 30, 2017). The Partnership may prepay the promissory note in whole or in part at any time without penalty. The promissory note is scheduled to mature on January 1, 2022. Interest expense on the promissory note was not significant for the three and nine months ended September 30, 2017 and 2016. The fair value of the outstanding balance of the promissory note at September 30, 2017 and December 31, 2016 approximated par value based on current market rates for similar debt instruments and is classified as Level III within the fair value hierarchy.

In December 2016, the Partnership repurchased $11.2 million of the promissory note for a purchase price of approximately $9.0 million. Approximately $108.8 million of the promissory note is outstanding at September 30, 2017 and December 31, 2016.

Promissory Notes Due July 15, 2019

In June 2017, as part of the settlement with investors in two commodities investment vehicles managed by an affiliate of the Partnership (disclosed in Note 9), the Partnership issued a series of promissory notes, aggregating to $53.9 million, to the investors of these commodities investment vehicles. Interest on these promissory notes accrues at the three month LIBOR plus 2% (3.33% at September 30, 2017). The Partnership may prepay these promissory notes in whole or in part at any time without penalty. These promissory notes are scheduled to mature on July 15, 2019. Interest expense on these promissory notes was not significant for the three and nine months ended September 30, 2017. The fair value of the outstanding balance of these promissory notes at September 30, 2017 approximated par value based on current market rates for similar debt instruments and is classified as Level III within the fair value hierarchy.

Debt Covenants

The Partnership is subject to various financial covenants under its loan agreements including, among other items, maintenance of a minimum amount of management fee-earning assets. The Partnership is also subject to various non-financial covenants under its loan agreements and the indentures governing its senior notes. The Partnership was in compliance with all financial and non-financial covenants under its various loan agreements as of September 30, 2017.

Loans Payable of Consolidated Funds

Loans payable of Consolidated Funds primarily represent amounts due to holders of debt securities issued by the CLOs. Several of the CLOs issued preferred shares representing the most subordinated interest, however these tranches are mandatorily redeemable upon the maturity dates of the senior secured loans payable, and as a result have been classified as liabilities and are included in loans payable of Consolidated Funds in the condensed consolidated balance sheets.

As of September 30, 2017 and December 31, 2016, the following borrowings were outstanding, which includes preferred shares classified as liabilities (Dollars in millions):



	As of September 30, 2017
	Borrowing Outstanding		Fair Value		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years
Senior secured notes	$	3,631.2	$	3,621.3	2.24	%		11.49
Subordinated notes, preferred shares and other	174.8		173.5		N/A		(a)	9.79
Total	$	3,806.0	$	3,794.8



	As of December 31, 2016
	Borrowing Outstanding		Fair Value		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years
Senior secured notes	$	3,681.0	$	3,672.5	2.45	%		10.22
Subordinated notes, preferred shares and other	195.6		193.8		N/A		(a)	9.26
Total	$	3,876.6	$	3,866.3


(a)	The subordinated notes and preferred shares do not have contractual interest rates, but instead receive distributions from the excess cash flows of the CLOs.

Loans payable of the CLOs are collateralized by the assets held by the CLOs and the assets of one CLO may not be used to satisfy the liabilities of another. This collateral consisted of cash and cash equivalents, corporate loans, corporate bonds and other securities. As of September 30, 2017 and December 31, 2016, the fair value of the CLO assets was $4.5 billion and $4.7 billion, respectively.