Long-Term Debt

Long-term debt consisted of the following at December 31 (in millions):



	2017							2016
	Principal		Discount and Issue Costs			Carrying Value		Principal		Discount and Issue Costs			Carrying Value
Direct Senior Obligations of AFG:
4.50% Senior Notes due June 2047	$	590	$	(2	)	$	588	$	—	$	—		$	—
3.50% Senior Notes due August 2026	425		(5		)	420		300		(3		)	297
9-7/8% Senior Notes due June 2019	—		—			—		350		(1		)	349
6-3/8% Senior Notes due June 2042	—		—			—		230		(7		)	223
5-3/4% Senior Notes due August 2042	—		—			—		125		(4		)	121
Other	3		—			3		3		—			3
	1,018		(7		)	1,011		1,008		(15		)	993

Direct Subordinated Obligations of AFG:
6-1/4% Subordinated Debentures due September 2054	150		(5		)	145		150		(5		)	145
6% Subordinated Debentures due November 2055	150		(5		)	145		150		(5		)	145
	300		(10		)	290		300		(10		)	290
	$	1,318	$	(17	)	$	1,301	$	1,308	$	(25	)	$	1,283

At December 31, 2017, scheduled principal payments on debt for the subsequent five years and thereafter were as follows: 2018 — none; 2019 — none; 2020 — none; 2021 — none; 2022 — none and thereafter — $1.32 billion.

In June 2017, AFG issued $350 million in 4.50% Senior Notes due in 2047 at a price of 99.46%. The net proceeds of the offering were used to redeem AFG’s $230 million outstanding principal amount of 6-3/8% Senior Notes due June 2042 at par value and to redeem AFG’s $125 million outstanding principal amount of 5-3/4% Senior Notes due August 2042 at par value in June 2017 and August 2017, respectively.

In November 2017, AFG issued an additional $125 million of 3.50% Senior Notes due in 2026 at a price of 99.698% and $240 million of 4.50% Senior Notes due in 2047 at a price of 102.374%. The net proceeds of the offering were used to redeem AFG’s $350 million outstanding principal amount of 9-7/8% Senior Notes due in June 2019 for $388 million (including a make-whole premium of $38 million) in December 2017.

In August 2016, AFG issued $300 million in 3.50% Senior Notes due in 2026 at a price of 99.608%. The net proceeds of the offering were used to fund a portion of the November 2016 acquisition of the noncontrolling interest in NATL (discussed in Note B — “Acquisitions and Sale of Businesses”). At the acquisition date, the $18 million outstanding under NATL’s bank credit facility, including $6 million borrowed in September 2016, was repaid and the credit agreement was terminated.

In September 2015, AFG used cash on hand to redeem the $132 million in outstanding AFG 7% Senior Notes due September 2050 at par value. In November 2015, AFG issued $150 million in 6% Subordinated Debentures due in 2055. During 2015, subsidiaries of AFG repaid all of the outstanding notes secured by real estate.

To achieve a desired balance between fixed and variable rate debt, AFG entered into an interest rate swap in June 2015, which effectively converted its 9-7/8% Senior Notes to a floating rate of three-month LIBOR plus 8.099%. In December 2017, AFG settled the interest rate swap contemporaneously with the redemption of the 9-7/8% Senior Notes. At December 31, 2016, the fair value of the interest rate swap (asset of $1 million at that date) and the offsetting adjustment to the carrying value of the notes were both included in the carrying value of the 9-7/8% Senior Notes in the table above.

AFG can borrow up to $500 million under its revolving credit facility, which expires in June 2021. Amounts borrowed under this agreement bear interest at rates ranging from 1.00% to 1.875% (currently 1.375%) over LIBOR based on AFG’s credit rating. No amounts were borrowed under this facility at December 31, 2017 or December 31, 2016.

Cash interest payments on long-term debt were $85 million in 2017, $75 million in 2016 and 2015. In 2017, 2016 and 2015, AFG received $2 million, $3 million and $2 million, respectively, in interest under the interest rate swap discussed above.