
8.	DEBT AND CAPITAL LEASE OBLIGATIONS

Debt, at stated values, and capital lease obligations consisted of the following (in millions):



	Final Maturity	December 31,
	Final Maturity	2016			2015
Bank credit facilities:
Valero Revolver	2020	$	—		$	—
VLP Revolver	2020	30			175
Canadian Revolver	2017	—			—
Accounts receivable sales facility	2017	100			100
Non-bank debt:
Valero Senior Notes
6.625%	2037	1,500			1,500
3.4%	2026	1,250			—
6.125%	2020	850			850
9.375%	2019	750			750
7.5%	2032	750			750
4.9%	2045	650			650
3.65%	2025	600			600
10.5%	2039	250			250
8.75%	2030	200			200
7.45%	2097	100			100
6.75%	2037	24			24
7.2%	2017	—			200
6.125%	2017	—			750
VLP Senior Notes, 4.375%	2026	500			—
Gulf Opportunity Zone Revenue Bonds, Series 2010, 4.0%	2040	300			300
Debenture, 7.65%	2026	100			100
Other debt	2023	51			17
Net unamortized debt issuance costs and other		(79		)	(66		)
Total debt		7,926			7,250
Capital lease obligations		75			85
Total debt and capital lease obligations		8,001			7,335
Less current portion		(115		)	(127		)
Debt and capital lease obligations, less current portion		$	7,886		$	7,208

Bank Credit Facilities

Valero Revolver

We have a $3 billion revolving credit facility (the Valero Revolver) with a group of financial institution lenders that matures in November 2020. We have the option to increase the aggregate commitments under the Valero Revolver to $4.5 billion and we may request two additional one-year extensions, subject to certain conditions. The Valero Revolver also provides for the issuance of letters of credit of up to $2.0 billion.

Outstanding borrowings under the Valero Revolver bear interest, at our option, at either (a) the adjusted LIBO rate (as defined in the Valero Revolver) for the applicable interest period in effect from time to time plus the applicable margin or (b) the alternate base rate (as defined in the Valero Revolver) plus the applicable margin. The Valero Revolver also requires payments for customary fees, including facility fees, letter of credit participation fees, and administrative agent fees. The interest rate and facility fees under the Valero Revolver are subject to adjustment based upon the credit ratings assigned to our senior unsecured debt.

We had no borrowings or repayments under the Valero Revolver during the years ended December 31, 2016, 2015, and 2014.

VLP Revolver

VLP has a $750 million senior unsecured revolving credit facility agreement (the VLP Revolver) with a group of lenders that matures in November 2020. The VLP Revolver is available only to the operations of VLP, and creditors of VLP do not have recourse against Valero. VLP has the option to increase the aggregate commitments under the VLP Revolver to $1.0 billion and we may request two additional one-year extensions, subject to certain conditions. VLP may terminate the VLP Revolver with notice to the lenders of at least three business days prior to termination. The VLP Revolver also provides for the issuance of letters of credit of up to $100 million. As a result of VLP obtaining an investment grade rating with respect to its issuance of senior notes in December 2016, VLP’s directly owned subsidiary, Valero Partners Operating Co. LLC, was released of its guarantee under the VLP Revolver.

Outstanding borrowings under the VLP Revolver bear interest, at VLP’s option, at either (a) the adjusted LIBO rate (as defined in the VLP Revolver) for the applicable interest period in effect from time to time plus the applicable margin or (b) the alternate base rate (as defined in the VLP Revolver) plus the applicable margin. As of December 31, 2016, the variable rate was 2.3125 percent. The VLP Revolver requires payments for customary fees, including commitment fees, letter of credit participation fees, and administrative agent fees. The VLP Revolver contains certain restrictive covenants, including a ratio of total debt to EBITDA (as defined in the VLP Revolver) for the prior four fiscal quarters of not greater than 5.0 to 1.0 as of the last day of each fiscal quarter, and limitations on VLP’s ability to pay distributions to its unitholders.

During the year ended December 31, 2016, VLP borrowed $139 million and $210 million under the VLP Revolver in connection with VLP’s acquisition from us of the McKee Terminal Services Business in April 2016 and the Meraux and Three Rivers Terminal Services Business in September 2016, respectively, and repaid $494 million on the VLP Revolver in December 2016. During the year ended December 31, 2015, VLP borrowed $200 million under the VLP Revolver in connection with VLP’s acquisition from us of the Houston and St. Charles Terminal Services Business and repaid $25 million on the VLP Revolver. During the year ended December 31, 2014, VLP had no borrowings or repayments under the VLP Revolver.

Canadian Revolver

In November 2016, one of our Canadian subsidiaries amended its committed revolving credit facility (the Canadian Revolver) to reduce the borrowing capacity from C$50 million to C$25 million under which it may borrow and obtain letters of credit and to extend the maturity date from November 2016 to November 2017.

We had no borrowings or repayments under the Canadian Revolver during the years ended December 31, 2016, 2015, and 2014.

Accounts Receivable Sales Facility

We have an accounts receivable sales facility with a group of third-party entities and financial institutions to sell eligible trade receivables on a revolving basis. In July 2016, we amended our agreement to decrease the facility from $1.4 billion to $1.3 billion and extended the maturity date to July 2017. Proceeds from the sale of receivables under this facility are reflected as debt. Under this program, one of our marketing subsidiaries (Valero Marketing) sells eligible receivables, without recourse, to another of our subsidiaries (Valero Capital), whereupon the receivables are no longer owned by Valero Marketing. Valero Capital, in turn, sells an undivided percentage ownership interest in the eligible receivables, without recourse, to the third-party entities and financial institutions. To the extent that Valero Capital retains an ownership interest in the receivables it has purchased from Valero Marketing, such interest is included in our financial statements solely as a result of the consolidation of the financial statements of Valero Capital with those of Valero Energy Corporation; the receivables are not available to satisfy the claims of the creditors of Valero Marketing or Valero Energy Corporation.

As of December 31, 2016 and 2015, $2.0 billion and $1.3 billion, respectively, of our accounts receivable composed the designated pool of accounts receivable included in the program. All amounts outstanding under the accounts receivable sales facility are reflected as debt on our balance sheets and proceeds and repayments are reflected as cash flows from financing activities on the statements of cash flows. During the years ended December 31, 2016, 2015, and 2014, we had no proceeds from or repayments under the accounts receivable sales facility.

Summary of Credit Facilities

We had outstanding borrowings, letters of credit issued, and availability under our revolving credit facilities as follows (in millions):



				December 31, 2016
	Facility Amount		Maturity Date	Outstanding Borrowings		Letters of Credit Issued		Availability
	Facility Amount		Maturity Date	Outstanding Borrowings		Letters of Credit Issued		Availability
Committed facilities:
Valero Revolver	$	3,000	November 2020	$	—	$	53	$	2,947
VLP Revolver	$	750	November 2020	$	30	$	—	$	720
Canadian Revolver	C$	25	November 2017	C$	—	C$	10	C$	15
Accounts receivable sales facility	$	1,300	July 2017	$	100	$	—	$	1,200
Letter of credit facilities	$	225	June 2017 and November 2017	$	—	$	—	$	225
Uncommitted facilities:
Letter of credit facilities	$	670	N/A	$	—	$	202	$	468

In July 2016, we amended one of our committed letter of credit facilities to extend the maturity date from June 2016 to June 2017. In November 2016, the remaining committed letter of credit facility was amended to reduce the borrowing capacity from $150 million to $100 million and to extend the maturity date from November 2016 to November 2017.

We also have various other uncommitted short-term bank credit facilities for which we are charged letter of credit issuance fees. These uncommitted credit facilities have no commitment fees or compensating balance requirements.

Non-Bank Debt

During the year ended December 31, 2016, the following activity occurred:


•	We issued $1.25 billion of 3.4 percent Senior Notes due September 15, 2026. Proceeds from this debt issuance totaled $1.246 billion. We also incurred $10 million of debt issuance costs.


•	We redeemed our 6.125 percent Senior Notes with a maturity date of June 15, 2017 for $778 million, or 103.70 percent of stated value.


•	We redeemed our 7.2 percent Senior Notes with a maturity date of October 15, 2017 for $213 million, or 106.27 percent of stated value.


•	VLP issued $500 million of 4.375 percent Senior Notes due December 15, 2026. Proceeds from this debt issuance totaled $500 million. Debt issuance costs totaled $4 million.

During the year ended December 31, 2015, the following activity occurred:


•	We issued $600 million of 3.65 percent Senior Notes due March 15, 2025 and $650 million of 4.9 percent Senior Notes due March 15, 2045. Proceeds from these debt issuances totaled $1.246 billion. We also incurred $12 million of debt issuance costs.


•	We made scheduled debt repayments of $400 million related to our 4.5 percent Senior Notes and $75 million related to our 8.75 percent debentures.

During the year ended December 31, 2014, we made a scheduled debt repayment of $200 million related to our 4.75 percent Senior Notes.

Other Debt

In June 2016, one of our consolidated joint ventures entered into a C$72 million senior secured credit facility. This non-revolving credit facility bears interest at a fixed rate (as defined by the lender) plus the applicable margin and matures in June 2023. During the year ended December 31, 2016, borrowings under this facility totaled C$72 million and debt repayments totaled C$4 million. As of December 31, 2016, the effective interest rate of this facility was 3.85 percent.

Other Disclosures

Interest and debt expense, net of capitalized interest is comprised as follows (in millions):



	Year Ended December 31,
	2016		2015		2014
Interest and debt expense incurred	$	511	$	504	$	467
Less capitalized interest	65		71		70
Interest and debt expense, net of capitalized interest	$	446	$	433	$	397

Our credit facilities and other debt arrangements contain various customary restrictive covenants, including cross-default and cross-acceleration clauses.

Principal maturities for our debt obligations and future minimum rentals on capital lease obligations as of December 31, 2016 were as follows (in millions):



	Debt			Capital Lease Obligations
2017	$	105		$	17
2018	5			16
2019	755			16
2020	885			13
2021	5			12
Thereafter	6,250			31
Net unamortized debt issuance costs and other	(79		)	—
Less interest expense	—			(30		)
Total	$	7,926		$	75

In October 2016, we entered into agreements to lease storage tanks located at three of our refineries. The leases commenced in January 2017. The lease agreements will be accounted for as capital leases and we expect to recognize capital lease assets and related obligations of approximately $490 million. These capital lease agreements have initial terms of 10 years each and each agreement has successive 10-year automatic renewal terms.