NOTE 5DEBT AND CREDIT FACILITIES

(unaudited)
(millions of dollars)	March 31, 2016	December 31, 2015 (a)	Weighted Average Interest Rate for the Three Months Ended March 31, 2016

TC PipeLines, LP Senior Credit Facility due 2017	370	200	1.68%
TC PipeLines, LP 2013 Term Loan Facility due 2018	500	500	1.68%
TC PipeLines, LP 2015 Term Loan Facility due 2018	170	170	1.57%
TC PipeLines, LP 4.65% Unsecured Senior Notes due 2021	350	350	4.65% (b)
TC PipeLines, LP 4.375% Unsecured Senior Notes due 2025	350	350	4.375% (b)
GTN 5.29% Unsecured Senior Notes due 2020	100	100	5.29% (b)
GTN 5.69% Unsecured Senior Notes due 2035	150	150	5.69% (b)
GTN Unsecured Term Loan Facility due 2019	75	75	1.37%
Tuscarora 3.82% Series D Senior Notes due 2017	16	16	3.82% (b)

	2,081	1,911
Less: unamortized debt issuance costs and debt discount (a)	8	8
Less: current portion	14	14

	2,059	1,889

(a)

As a result of the application of ASU no. 2015-03 and similar to the presentation of debt discounts, debt issuance costs of $7 million at December 31, 2015 previously reported as other assets in the balance sheet were reclassified as an offset against debt (Refer to Note 3).

(b)

Fixed interest rate

The Partnership’s Senior Credit Facility consists of a $500 million senior revolving credit facility with a banking syndicate, maturing November 20, 2017, under which $370 million was outstanding at March 31, 2016 (December 31, 2015 - $200 million), leaving $130 million available for future borrowing.

After hedging activity, the interest rate incurred on the 2013 Term Loan Facility averaged 2.20 percent for the three months ended March 31, 2016 (2015 – 1.83 percent). Prior to hedging activities, the LIBOR-based interest rate was 1.69 percent at March 31, 2016 (December 31, 2015 – 1.50 percent).

The 2013 Term Loan Facility and the 2015 Term Loan Facility (Term Loan Facilities) and the Senior Credit Facility require the Partnership to maintain a certain leverage ratio (debt to adjusted cash flow [net income plus cash distributions received, extraordinary losses, interest expense, expense for taxes paid or accrued, and depreciation and amortization expense less equity earnings and extraordinary gains]) be no greater than:

5.50 to 1.00 for the quarters ending March 31, 2016 to September 30, 2016;

5.00 to 1.00 for the quarter ending December 31, 2016 and each subsequent fiscal quarter, except for the fiscal quarter and the two following fiscal quarters in which one or more acquisitions has been executed, in which case the leverage ratio is to be no greater than 5.50 to 1.00.

The leverage ratio was 4.86 to 1.00 as of March 31, 2016.

GTN’s Unsecured Senior Notes, along with GTN’s Unsecured Term Loan Facility contain a covenant that limits total debt to no greater than 70 percent of GTN’s total capitalization. GTN’s total debt to total capitalization ratio at March 31, 2016 was 44.1 percent.

The Series D Senior Notes which require yearly principal payments until maturity, are secured by Tuscarora’s transportation contracts, supporting agreements and substantially all of Tuscarora’s property. The note purchase agreements contain certain provisions that include, among other items, limitations on additional indebtedness and distributions to partners. The Series D Senior Notes contain a covenant that limits total debt to no greater than 45 percent of Tuscarora’s total capitalization. Tuscarora’s total debt to total capitalization ratio at March 31, 2016 was 15.1 percent. Additionally, the Series D Senior Notes require Tuscarora to maintain a Debt Service Coverage Ratio (cash available from operations divided by a sum of interest expense and principal payments) of greater than 3.00 to 1.00. The ratio was 4.56 to 1.00 as of March 31, 2016.

At March 31, 2016, the Partnership was in compliance with its financial covenants, in addition to the other covenants which include restrictions on entering into mergers, consolidations and sales of assets, granting liens, material amendments to the Third Amended and Restated Agreement of Limited Partnership (Partnership Agreement), incurring additional debt and distributions to unitholders.

The principal repayments required of the Partnership on its debt are as follows:

(unaudited)
(millions of dollars)

2016		14
2017		392
2018		690
2019		35
2020		100
Thereafter		850

		2,081