BORROWINGS

9 Months Ended

Sep. 30, 2019



	September 30,		December 31,
(Dollars in millions)	2019		2018
Borrowings consisted of:
2.7% notes due January 2020	$	250	$	250
4.5% notes due January 2021	185		185
3.5% notes due December 2021	298		297
3.6% notes due August 2022	740		739
1.50% notes due May 2023 ⁽¹⁾	815		855
7 1/4% debentures due January 2024	198		197
7 5/8% debentures due June 2024	43		43
3.8% notes due March 2025	696		691
1.875% notes due November 2026 ⁽¹⁾	539		566
7.60% debentures due February 2027	195		195
4.5% notes due December 2028	492		492
4.8% notes due September 2042	493		493
4.65% notes due October 2044	873		872
Commercial paper and short-term borrowings	392		243
Credit facilities borrowings	—		50
Total borrowings	6,209		6,168
Borrowings due within one year	642		243
Long-term borrowings	$	5,567	$	5,925

⁽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.

Credit Facilities and Commercial Paper Borrowings

The Company has access to a $1.50 billion revolving credit agreement (the "Credit Facility") expiring 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 September 30, 2019 and December 31, 2018, the Company had no outstanding borrowings under the Credit Facility. At September 30, 2019, the Company's commercial paper borrowings were $297 million with a weighted average interest rate of 2.29 percent. At December 31, 2018, the Company's commercial paper borrowings were $130 million with a weighted average interest rate of 2.91 percent.

The Company has access to up to $250 million under an 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. Borrowings under the A/R Facility are classified as long-term because the Company has the ability and intent to refinance such borrowings on a long-term basis. In first quarter 2019, $125 million available under the A/R Facility was borrowed and $175 million repaid using available cash. In second quarter 2019, $100 million available under the A/R Facility was borrowed and $100 million repaid using available cash. In third quarter 2019, $110 million available under the A/R Facility was borrowed and $110 million repaid using available cash. At September 30, 2019, the Company had no borrowings outstanding under the A/R Facility. At December 31, 2018, the Company's borrowings under the A/R Facility were $50 million with an interest rate of 3.39 percent.

The Company has access to borrowings of up to €150 million ($163 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. At September 30, 2019, the Company's outstanding borrowings under this facility were $95 million with a weighted average interest rate of 1.51 percent. At December 31, 2018, the Company's amount of outstanding borrowings under this facility were $112 million with a weighted average interest rate of 1.70 percent.

The Credit Facility and A/R Facility contain customary covenants, including requirements to maintain certain financial ratios, that determine the events of default, amounts available, and terms of borrowings. The Company was in compliance with all covenants at both September 30, 2019 and December 31, 2018.

Fair Value of Borrowings

Eastman has classified its total borrowings at September 30, 2019 and December 31, 2018 under the fair value hierarchy as described in the accounting policies in Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2018 Annual Report on Form 10-K. 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 commercial paper and receivables facility equals the carrying value and is classified as Level 2. At September 30, 2019 and December 31, 2018, the fair value of total borrowings was $6.726 billion and $6.216 billion, respectively. The Company had no borrowings classified as Level 3 as of September 30, 2019 and December 31, 2018.