BORROWINGS

6 Months Ended

Jun. 30, 2020


	June 30,		December 31,
(Dollars in millions)	2020		2019
Borrowings consisted of:
4.5% notes due January 2021	$	185	$	185
3.5% notes due December 2021	298		298
3.6% notes due August 2022	742		741
1.50% notes due May 2023 ⁽¹⁾	839		840
7 1/4% debentures due January 2024	198		198
7 5/8% debentures due June 2024	43		43
3.8% notes due March 2025	701		695
1.875% notes due November 2026 ⁽¹⁾	555		556
7.60% debentures due February 2027	195		195
4.5% notes due December 2028	493		493
4.8% notes due September 2042	493		493
4.65% notes due October 2044	874		874
Commercial paper and short-term borrowings	517		171


Total borrowings	6,133		5,782
Borrowings due within one year	702		171
Long-term borrowings	$	5,431	$	5,611

⁽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.

Loan Agreement, Credit Facility, and Commercial Paper Borrowings

In April 2020, the Company borrowed $250 million under a new 364-Day Term Loan Credit Agreement (the "Term Loan") as a precautionary measure due to increased financial market volatility, particularly in the availability and terms of commercial paper, resulting from the COVID-19 coronavirus global pandemic ("COVID-19"). Borrowings under the Term Loan are subject to interest at varying spreads above quoted market rates. At June 30, 2020, the Company's borrowings under the Term Loan were $249 million with a weighted average interest rate of 2.75 percent.

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. In first quarter 2020, the Company borrowed a total of $400 million under the Credit Facility. In second quarter 2020, the Company repaid a total of $400 million using available cash. At June 30, 2020 and December 31, 2019, the Company had no outstanding borrowings under the Credit Facility. At June 30, 2020, the Company's commercial paper borrowings were $268 million with a weighted average interest rate of 0.53 percent. At December 31, 2019, the Company's commercial paper borrowings were $170 million with a weighted average interest rate of 2.03 percent.

The Credit Facility and Term Loan contain customary covenants, including requirements to maintain certain financial ratios, that determine the events of default, amounts available, and terms of borrowings. In April 2020, the Company amended the Credit Facility and the Term Loan maximum debt covenants to reflect the higher cash balance to enhance liquidity due to, and the expected negative impact on operating results of, COVID-19 and added a new restrictive covenant prohibiting stock repurchases until June 30, 2021 in the event certain financial ratios are exceeded. The Company was in compliance with all applicable covenants at both June 30, 2020 and December 31, 2019.

The Company did not renew the $250 million accounts receivable securitization agreement (the "A/R Facility") which expired April 2020. Eastman Chemical Financial Corporation ("ECFC"), a subsidiary of the Company, had an agreement to sell interests in trade receivables under the A/R Facility to a third party purchaser. Third party creditors of ECFC had 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 were subject to interest rates based on a spread over the lender's borrowing costs, and ECFC paid a fee to maintain availability of the A/R Facility. In first quarter 2020, the Company borrowed a total of $350 million, in two tranches, under the A/R Facility and repaid a total of $350 million using available cash. At December 31, 2019, the Company had no borrowings outstanding under the A/R Facility.

Fair Value of Borrowings

Eastman has classified its total borrowings at June 30, 2020 and December 31, 2019 under the fair value hierarchy as defined in the accounting policies in Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2019 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 Term Loan, Credit Facility, and commercial paper, equals the carrying value and is classified as Level 2. At June 30, 2020 and December 31, 2019, the fair value of total borrowings was $6.720 billion and $6.275 billion, respectively. The Company had no borrowings classified as Level 3 as of June 30, 2020 and December 31, 2019.