DEBT AND CREDIT FACILITIES

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Debt and Credit Facilities

DEBT AND CREDIT FACILITIES

LINES OF CREDIT

Primary U.S. Committed Lines of Credit

Sempra Energy and Sempra Global

On May 17, 2019, Sempra Energy and Sempra Global each entered into a separate five-year credit agreement, both expiring in May 2024. The credit agreements permit borrowings of up to $1.25 billion by Sempra Energy and $3.19 billion by Sempra Global. For both credit facilities, Citibank, N.A. serves as administrative agent for a syndicate of 23 lenders and no single lender has greater than a 6-percent share of either credit facility. The credit agreements supersede Sempra Energy’s $1.25 billion credit agreement and Sempra Global’s $3.19 billion credit agreement, which were both set to expire in 2020. Borrowings for each credit facility bear interest at benchmark rates plus a margin based on Sempra Energy’s credit ratings.

California Utilities

On May 17, 2019, SDG&E and SoCalGas each entered into a separate five-year credit agreement, both expiring in May 2024. The credit agreements permit borrowings of up to $1.5 billion by SDG&E and $750 million by SoCalGas. For both credit facilities, JPMorgan Chase Bank, N.A. serves as administrative agent for a syndicate of 23 lenders and no single lender has greater than a 6-percent share of either credit facility. The credit agreements replaced the California Utilities’ combined $1 billion credit agreement, which had a maximum of $750 million that could be borrowed by either utility, that was set to expire in 2020. Borrowings for each credit facility bear interest at benchmark rates plus a margin based on the borrowing utility’s credit ratings.

At June 30, 2019, these four primary U.S. committed lines of credit permit Sempra Energy Consolidated to borrow an aggregate amount of approximately $6.69 billion. The principal terms of these committed lines of credit, which provide liquidity and support commercial paper, are described below.

PRIMARY U.S. COMMITTED LINES OF CREDIT
(Dollars in millions)
	June 30, 2019
	Total facility		Commercial paper outstanding(1)			Available unused credit
Sempra Energy(2)	$	1,250	$	—		$	1,250
Sempra Global(3)	3,185		(1,447		)	1,738
SDG&E(4)	1,500		(18		)	1,482
SoCalGas(4)	750		—			750
Total	$	6,685	$	(1,465	)	$	5,220

⁽¹⁾  Because the commercial paper programs are supported by these lines, we reflect the amount of commercial paper outstanding as a reduction to the available unused credit.

⁽²⁾  The facility also provides for issuance of $200 million of letters of credit on behalf of Sempra Energy with the amount of borrowings otherwise available under the facility reduced by the amount of outstanding letters of credit. Subject to obtaining commitments from existing or new lenders and satisfaction of other specified conditions, Sempra Energy has the right to increase the letter of credit commitment up to $500 million. No letters of credit were outstanding at June 30, 2019.

⁽³⁾  Commercial paper outstanding is before reductions of unamortized discount of $3 million. Sempra Energy guarantees Sempra Global’s obligations under the credit facility.

⁽⁴⁾  The facility also provides for issuance of $100 million of letters of credit on behalf of the borrowing utility with the amount of borrowings otherwise available under the facility reduced by the amount of outstanding letters of credit. Subject to obtaining commitments from existing or new lenders and satisfaction of other specified conditions, the borrowing utility has the right to increase the letter of credit commitment up to $250 million. No letters of credit were outstanding at June 30, 2019.

Sempra Energy, SDG&E and SoCalGas each must maintain a ratio of indebtedness to total capitalization (as defined in each of the applicable credit facilities) of no more than 65 percent at the end of each quarter. At June 30, 2019, each entity was in compliance with this ratio and all other financial covenants under its respective credit facility.

Foreign Committed Lines of Credit

In February 2019, IEnova revised the terms of its five-year revolving credit facility by increasing the amount available under the facility from $1.17 billion to $1.5 billion, extending the expiration of the facility from August 2020 to February 2024 and increasing the syndicate of lenders from eight to 10. At June 30, 2019, available unused credit on this line was approximately $567 million.

On April 11, 2019, IEnova entered into a three-year, $100 million revolving credit agreement with Scotiabank Inverlat, S.A. Under the agreement, withdrawals may be made for up to one year in either U.S. dollars or Mexican pesos. At June 30, 2019, no amounts were outstanding, and available unused credit was $100 million.

Letters of Credit

Outside of our domestic and foreign committed credit facilities, we have bilateral unsecured standby letter of credit capacity with select lenders that is uncommitted and supported by reimbursement agreements. At June 30, 2019, we had approximately $712 million in standby letters of credit outstanding under these agreements.

WEIGHTED-AVERAGE INTEREST RATES

The weighted-average interest rates on total short-term debt at Sempra Energy Consolidated were 3.10 percent and 2.99 percent at June 30, 2019 and December 31, 2018, respectively. The weighted-average interest rates on total short-term debt at SDG&E were 2.58 percent and 2.97 percent at June 30, 2019 and December 31, 2018, respectively. The weighted-average interest rate on total short-term debt at SoCalGas was 2.58 percent at December 31, 2018.

LONG-TERM DEBT

Sempra Energy

In June 2019, we issued $758 million of 5.75-percent, junior subordinated notes maturing in 2079, with a par value of $25 per note. We received proceeds of $735 million (net of underwriting discounts and debt issuance costs of $23 million). We used the proceeds from the offering to repay outstanding commercial paper and for other general corporate purposes. We may redeem some or all of the notes before their maturity, as follows:

▪ on or after October 1, 2024, at a redemption price equal to 100 percent of the principal amount, plus accrued and unpaid interest;

▪ before October 1, 2024, if the U.S. federal tax law or regulations are amended or certain other events occur such that there is more than insubstantial risk that interest payable on the notes would no longer be deductible for federal income tax purposes, at a redemption price equal to 100 percent of the principal amount, plus accrued and unpaid interest; or

▪ before October 1, 2024, if a credit rating agency publicly changes certain equity credit methodology for securities such as these notes that results in a shortening of the length of time for equity credit initially assigned or lowers the equity credit initially assigned, at a redemption price equal to 102 percent of the principal amount, plus accrued and unpaid interest.

The notes are unsecured obligations and rank junior and subordinate in right of payment to our existing and future senior indebtedness. The notes will rank equally in right of payment with any future unsecured indebtedness that we may incur if the terms of such indebtedness provide that it ranks equally with the notes in right of payment. The notes are effectively subordinated in right of payment to any secured indebtedness that we have or may incur and to all indebtedness and other liabilities of our subsidiaries.

SDG&E

In May 2019, SDG&E issued $400 million of 4.10-percent, first mortgage bonds maturing in 2049. We received proceeds of $396 million (net of underwriting discounts and debt issuance costs of $4 million). SDG&E used the proceeds from the offering to repay outstanding commercial paper and for other general corporate purposes.

SoCalGas

In June 2019, SoCalGas issued $350 million of 3.95-percent, first mortgage bonds maturing in 2050. We received proceeds of $346 million (net of debt discount, underwriting discounts and debt issuance costs of $4 million). SoCalGas used the proceeds from the offering to repay outstanding commercial paper and for other general corporate purposes.

INTEREST RATE SWAPS

In February 2019, Sempra Energy entered into floating-to-fixed interest rate swaps to hedge interest payments on the $850 million of variable rate notes issued in October 2017 and maturing in March 2021, resulting in an all-in fixed rate of 3.069 percent. We discuss our interest rate swaps to hedge cash flows in Note 8.