Debt

3 Months Ended

Mar. 31, 2021

Debt

Debt

Note 7—Debt

Overview

Outstanding debt—The aggregate principal amounts and aggregate carrying amounts, net of debt-related balances, including unamortized discounts, premiums, issue costs and fair value adjustments of our debt, were as follows (in millions):


		Principal amount							Carrying amount
		March 31,			December 31,				March 31,			December 31,
		2021			2020				2021			2020
6.375% Senior Notes due December 2021		$	38		$	38			$	38		$	38
5.52% Senior Secured Notes due May 2022			89			111				88			111
3.80% Senior Notes due October 2022			27			27				27			27
0.50% Exchangeable Senior Bonds due January 2023			140			463				139			462
5.375% Senior Secured Notes due May 2023			362			364				359			360
5.875% Senior Secured Notes due January 2024			544			585				536			577
7.75% Senior Secured Notes due October 2024			360			360				354			354
6.25% Senior Secured Notes due December 2024			375			375				370			369
6.125% Senior Secured Notes due August 2025			435			468				428			461
7.25% Senior Notes due November 2025			411			411				406			405
4.00% Senior Guaranteed Exchangeable Bonds due December 2025			294			—				260			—
7.50% Senior Notes due January 2026			569			569				565			565
2.50% Senior Guaranteed Exchangeable Bonds due January 2027			238			238				274			277
11.50% Senior Guaranteed Notes due January 2027			687			687				1,113			1,139
6.875% Senior Secured Notes due February 2027			550			550				543			542
8.00% Senior Notes due February 2027			612			612				607			606
7.45% Notes due April 2027			52			52				51			51
8.00% Debentures due April 2027			22			22				22			22
7.00% Notes due June 2028			261			261				265			266
7.50% Notes due April 2031			396			396				394			394
6.80% Senior Notes due March 2038			610			610				605			605
7.35% Senior Notes due December 2041			177			177				176			176
Total debt			7,249			7,376				7,620			7,807

Less debt due within one year
6.375% Senior Notes due December 2021			38			38				38			38
5.52% Senior Secured Notes due May 2022			71			93				70			92
5.375% Senior Secured Notes due May 2023			47			47				46			46
5.875% Senior Secured Notes due January 2024			83			83				80			80
7.75% Senior Secured Notes due October 2024			60			60				58			58
6.25% Senior Secured Notes due December 2024			62			62				60			60
6.125% Senior Secured Notes due August 2025			66			66				64			64
2.50% Senior Guaranteed Exchangeable Bonds due January 2027			—			—				6			6
11.50% Senior Guaranteed Notes due January 2027			—			—				70			61
6.875% Senior Secured Notes due February 2027			34			—				32			—
Total debt due within one year			461			449				524			505
Total long-term debt		$	6,788		$	6,927			$	7,096		$	7,302

Scheduled maturities—At March 31, 2021, the principal installments and other installments, representing contractual interest payments of previously restructured debt, were as follows (in millions):


		Principal			Other
		installments			installments			Total
Twelve months ending March 31,
2022		$	461		$	76		$	537
2023			588			76			664
2024			895			77			972
2025			516			77			593
2026			1,527			78			1,605
Thereafter			3,262			78			3,340
Total installments of debt		$	7,249		$	462			7,711
Total debt-related balances, net									(91)
Total carrying amount of debt								$	7,620

Interest rate adjustments—The interest rates for certain of our notes are subject to adjustment from time to time upon a change to the credit rating of our non-credit enhanced senior unsecured long-term debt. As of March 31, 2021, the interest rate in effect for the 6.375% senior notes due December 2021, 3.80% senior notes due October 2022 and the 7.35% senior notes due December 2041 was 8.375 percent, 5.80 percent and 9.35 percent, respectively.

Secured Credit Facility—As of March 31, 2021, we have a $1.3 billion secured revolving credit facility established under a bank credit agreement (as amended from time to time, the “Secured Credit Facility”), which is scheduled to expire on June 22, 2023. The Secured Credit Facility is guaranteed by Transocean Ltd. and certain wholly owned subsidiaries. We may borrow under the Secured Credit Facility at either (1) the reserve adjusted London interbank offered rate plus a margin (the “Secured Credit Facility Margin”), which ranges from 2.625 percent to 3.375 percent based on the credit rating of the Secured Credit Facility, or (2) the base rate specified in the credit agreement plus the Secured Credit Facility Margin, minus one percent per annum. Throughout the term of the Secured Credit Facility, we pay a facility fee on the amount of the underlying commitment which ranges from 0.375 percent to 1.00 percent based on the credit rating of the Secured Credit Facility. At March 31, 2021, based on the credit rating of the Secured Credit Facility on that date, the Secured Credit Facility Margin was 3.375 percent and the facility fee was 0.875 percent. At March 31, 2021, we had no borrowings outstanding, $25 million of letters of credit issued, and we had $1.3 billion of available borrowing capacity under the Secured Credit Facility. See Note 10—Contingencies.

Exchangeable bonds

Exchange terms—At March 31, 2021, the current exchange rates, expressed as the number of Transocean Ltd. shares per $1,000 note, and the implied exchange prices per Transocean Ltd. share for our exchangeable bonds were as follows:


					Implied
		Exchange			exchange
		rate			price
0.50% Exchangeable Senior Bonds due January 2023			97.29756		$	10.28
4.00% Senior Guaranteed Exchangeable Bonds due December 2025			190.47620			5.25
2.50% Senior Guaranteed Exchangeable Bonds due January 2027			162.16260			6.17

The exchange rates of our exchangeable bonds, identified above, are subject to adjustment upon the occurrence of certain events. The 0.50% Exchangeable Senior Bonds may be exchanged by holders into Transocean Ltd. shares at any time prior to the close of business on the business day immediately preceding the maturity date. The 2.50% Senior Guaranteed Exchangeable Bonds may be exchanged by holders into Transocean Ltd. shares at any time prior to the close of business on the second business day immediately preceding the maturity date or redemption date. The 4.00% Senior Guaranteed Exchangeable Bonds may be exchanged by holders at any time prior to the close of business on the second business day immediately preceding the maturity date and, at our election, such exchange may be settled by delivering cash, Transocean Ltd. shares or a combination of cash and shares.

Effective interest rates and fair values—At March 31, 2021, the effective interest rates and estimated fair values of our exchangeable bonds were as follows (in millions):


		Effective			Fair
		interest rate			value
0.50% Exchangeable Senior Bonds due January 2023			0.5%		$	104
4.00% Senior Guaranteed Exchangeable Bonds due December 2025			6.9%			280
2.50% Senior Guaranteed Exchangeable Bonds due January 2027			0.0%			195

We estimated the fair values of the exchangeable debt instruments, including the exchange features, by employing a binomial lattice model and by using significant other observable inputs, representative of a Level 2 fair value measurement, including the terms and credit spreads of our debt and expected volatility of the market price for our shares.

Related balances—At March 31, 2021 and December 31, 2020, the premium associated with the original issuance of the 0.50% Exchangeable Senior Bonds had a carrying amount of $172 million, recorded in equity as a component of additional paid-in capital.

Debt issuances

Senior guaranteed exchangeable bonds—On February 26, 2021, we issued $294 million aggregate principal amount of the 4.00% Senior Guaranteed Exchangeable Bonds and made an aggregate cash payment of $11 million in private exchanges (the “2021 Private Exchanges”) for $323 million aggregate principal amount of outstanding 0.50% Exchangeable Senior Bonds. In the three months ended March 31, 2021, as a result of the 2021 Private Exchanges, we recognized a gain of $51 million ($0.08 per diluted share), with no tax effect, associated with the retirement of debt (see “—Debt retirements”). The 4.00% Senior Guaranteed Exchangeable Bonds are guaranteed by Transocean Ltd. and the same subsidiaries of Transocean Inc. that guarantee the 2.50% Senior Guaranteed Exchangeable Bonds and 11.50% senior guaranteed notes due January 2027. The initial carrying amount of the 4.00% Senior Guaranteed Exchangeable Bonds, measured at the estimated fair value on the date of issuance, was $260 million. We estimated the fair value of the exchangeable debt instrument, including the exchange feature, by employing a binomial lattice model and by using significant other observable inputs, representative of a Level 2 fair value measurement, including the terms and credit spreads of our debt and expected volatility of the market price for our shares.

Guaranteed senior unsecured notes—On January 17, 2020, we issued $750 million aggregate principal amount of 8.00% senior unsecured notes due February 2027 (the “8.00% Senior Notes”), and we received aggregate cash proceeds of $743 million, net of issue costs. We may redeem all or a portion of the 8.00% Senior Notes on or prior to February 1, 2023 at a price equal to 100 percent of the aggregate principal amount plus a make-whole premium, and subsequently, at specified redemption prices.

Debt retirements

During the three months ended March 31, 2021 and 2020, we retired certain notes as a result of redemption, private exchanges and open market repurchases. The aggregate principal amounts, cash payments and recognized gain or loss for such transactions were as follows (in millions):


		Three months ended March 31, 2021									Three months ended March 31, 2020
		Exchanged			Repurchased			Total			Redeemed			Repurchased			Total
6.50% Senior Notes due November 2020		$	—		$	—		$	—		$	—		$	8		$	8
6.375% Senior Notes due December 2021			—			—			—			—			38			38
3.80% Senior Notes due October 2022			—			—			—			—			3			3
0.50% Exchangeable Senior Bonds due January 2023			323			—			323			—			—			—
5.375% Senior Secured Notes due May 2023			—			1			1			—			6			6
9.00% Senior Notes due July 2023			—			—			—			714			—			714
Aggregate principal amount retired		$	323		$	1		$	324		$	714		$	55		$	769

Aggregate cash payment		$	11		$	1		$	12		$	767		$	46		$	813
Aggregate principal amount of debt issued in exchanges		$	294		$	—		$	294		$	—		$	—		$	—
Aggregate net gain (loss)		$	51		$	—		$	51		$	(65)		$	8		$	(57)