BORROWINGS



	December 31,
(Dollars in millions)	2018		2017
Borrowings consisted of:
5.5% notes due November 2019	$	—	$	250
2.7% notes due January 2020	250		797
4.5% notes due January 2021	185		185
3.5% notes due December 2021	297		—
3.6% notes due August 2022	739		738
1.50% notes due May 2023 ⁽¹⁾	855		895
7 1/4% debentures due January 2024	197		197
7 5/8% debentures due June 2024	43		43
3.8% notes due March 2025	691		690
1.875% notes due November 2026 ⁽¹⁾	566		592
7.60% debentures due February 2027	195		195
4.5% notes due December 2028	492		—
4.8% notes due September 2042	493		493
4.65% notes due October 2044	872		871
Commercial paper and short-term borrowings	243		389
Credit facilities borrowings	50		200
Capital leases and other	—		5
Total borrowings	6,168		6,540
Borrowings due within one year	243		393
Long-term borrowings	$	5,925	$	6,147

⁽¹⁾

The carrying value of the euro-denominated 1.50% notes due May 2023 and 1.875% notes due November 2026 will fluctuate with changes in the euro exchange rate. The carrying value of these euro-denominated borrowings have been designated as non-derivative net investment hedges of a portion of the Company's net investments in euro functional-currency denominated subsidiaries to offset foreign currency fluctuations.

In fourth quarter 2018, the Company sold 3.5% notes due December 2021 in the principal amount of $300 million and 4.5% notes due December 2028 in the principal amount of $500 million. Net proceeds from the notes were $789 million and were used, together with available cash, for the early and full repayment of the 5.5% notes due November 2019 ($250 million principal) and the partial redemption of the 2.7% notes due January 2020 ($550 million principal). Total consideration for these redemptions were $806 million ($800 million total principal and $6 million for the early redemption premiums) and are reported as financing activities on the Consolidated Statements of Cash Flows. The early repayment resulted in a charge of $7 million for early debt extinguishment costs which were primarily attributable to the early redemption premiums and related unamortized costs. The book value of the redeemed debt was $799 million.

Credit Facilities and Commercial Paper Borrowings

In December 2016, the Company borrowed $300 million under a five-year term loan agreement ("2021 Term Loan"). Borrowings under the 2021 Term Loan agreement were subject to interest at varying spreads above quoted market rates. As of December 31, 2017, the 2021 Term Loan outstanding balance was $200 million with an interest rate of 2.60 percent. In 2018, the 2021 Term Loan was repaid using available cash.

The Company has access to a $1.50 billion revolving credit agreement (the "Credit Facility") that was amended in October 2018 to increase the available borrowing amount from $1.25 billion and to extend the maturity to October 2023. Borrowings under the Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused commitment. The Credit Facility provides available liquidity for general corporate purposes and supports commercial paper borrowings. Commercial paper borrowings are classified as short-term. At December 31, 2018 and 2017, the Company had no outstanding borrowings under the Credit Facility. At December 31, 2018, commercial paper borrowings were $130 million with a weighted average interest rate of 2.91 percent. At December 31, 2017, the Company's commercial paper borrowings were $280 million with a weighted average interest rate of 1.61 percent.

The Company has access to a $250 million accounts receivable securitization agreement (the "A/R Facility") that expires April 2020. Eastman Chemical Financial Corporation ("ECFC"), a subsidiary of the Company, has an agreement to sell interests in trade receivables under the A/R Facility to a third party purchaser. Third party creditors of ECFC have first priority claims on the assets of ECFC before those assets would be available to satisfy the Company's general obligations. Borrowings under the A/R Facility are subject to interest rates based on a spread over the lender's borrowing costs, and ECFC pays a fee to maintain availability of the A/R Facility. At December 31, 2018, the Company's borrowings under the A/R Facility were $50 million supported by trade receivables with an interest rate of 3.39 percent. At December 31, 2017, the Company had no borrowings under the A/R Facility.

The Company has access to borrowings of up to €150 million ($172 million) under a receivables facility based on the discounted value of selected customer accounts receivable. This facility expires December 2020 and renews for another one year period if not terminated with 90 days notice by either party. These arrangements include receivables in the United States, Belgium, and Finland, and are subject to various eligibility requirements. Borrowings under this facility are subject to interest at an agreed spread above LIBOR and EURIBOR plus administration and insurance fees and are classified as short-term. The amount of outstanding borrowings under this facility were $112 million at December 31, 2018 with a weighted average interest rate of 1.70 percent.

The Credit and A/R Facilities and other borrowing agreements contain customary covenants and events of default, some of which require the Company to maintain certain financial ratios that determine the amounts available and terms of borrowings. The Company was in compliance with all covenants at both December 31, 2018 and December 31, 2017.

Fair Value of Borrowings

Eastman has classified its total borrowings at December 31, 2018 and 2017 under the fair value hierarchy as defined in the accounting policies in Note 1, "Significant Accounting Policies". The fair value for fixed-rate debt securities is based on quoted market prices for the same or similar debt instruments and is classified as Level 2. The fair value for the Company's other borrowings primarily under the 2021 Term Loan, commercial paper, A/R Facility, and receivables facility equals the carrying value and is classified as Level 2. At December 31, 2018 and 2017, the fair value of total borrowings was $6,216 million and $6,980 million, respectively. The Company had no borrowings classified as Level 1 or Level 3 as of December 31, 2018 and 2017.